Money for Nothing and Checks for Free: Recent Developments in U.S. Subprime Mortgage Markets

19 Pages Posted: 17 Aug 2007

See all articles by John Kiff

John Kiff

International Monetary Fund

Paul S. Mills

affiliation not provided to SSRN

Date Written: August 2007

Abstract

After a number of warning signs, the U.S. "subprime mortgage crisis" became a headline issue in February 2007. Notwithstanding the bankruptcy of numerous mortgage companies, historically high delinquencies and foreclosures, and a significant tightening in subprime lending standards, the impact thus far on core U.S. financial institutions has been limited. This paper reviews the history and structure of the subprime market. The results suggest that new origination and funding technology appear to have made the financial system more stable at the expense of undermining the effectiveness of consumer protection regulation. Potential solutions to the management of this trade-off are then explored.

Keywords: Working Paper, United States, Housing, Consumer credit, Financial institutions, Financial systems, Bankruptcy, Capital markets

Suggested Citation

Kiff, John and Mills, Paul S, Money for Nothing and Checks for Free: Recent Developments in U.S. Subprime Mortgage Markets (August 2007). IMF Working Papers, Vol. , pp. 1-18, 2007. Available at SSRN: https://ssrn.com/abstract=1006316

John Kiff

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Paul S Mills (Contact Author)

affiliation not provided to SSRN

No Address Available

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