Alternative Lending Channels and the Crisis in U.S. Housing Markets

35 Pages Posted: 24 Dec 2011

See all articles by James A. Berkovec

James A. Berkovec

Federal Home Loan Mortgage Corporation (FHLMC)

Yan Chang

Federal Home Loan Mortgage Corporation (FHLMC)

Douglas A. McManus

Federal Home Loan Mortgage Corporation (FHLMC)

Multiple version iconThere are 2 versions of this paper

Date Written: December 23, 2011

Abstract

To what degree has the development of alternative mortgage funding channels promoted the recent boom and bust in U.S. housing markets? Past research examined whether Alt-A and subprime market shares are correlated with the housing bubble. This paper expands the analysis to include the share of specific 'alternative' lending terms and finds that the shares of interest-only and negative amortization loans are important factors in explaining the housing bubble. This result suggests that research on the housing market bubble should focus on the impacts of loan contract terms rather than loan channel.

Keywords: House prices, Credit cycles, Asset bubbles

JEL Classification: R3, E31, G01

Suggested Citation

Berkovec, James A. and Chang, Yan and McManus, Douglas A., Alternative Lending Channels and the Crisis in U.S. Housing Markets (December 23, 2011). Available at SSRN: https://ssrn.com/abstract=1976274 or http://dx.doi.org/10.2139/ssrn.1976274

James A. Berkovec

Federal Home Loan Mortgage Corporation (FHLMC) ( email )

8200 Jones Branch Drive
Mclean, VA 22102
United States
703-903-4356 (Phone)

Yan Chang

Federal Home Loan Mortgage Corporation (FHLMC) ( email )

8200 Jones Branch Road
McLean, VA 22101
United States

Douglas A. McManus (Contact Author)

Federal Home Loan Mortgage Corporation (FHLMC) ( email )

8200 Jones Branch Road
McLean, VA 22101
United States
703-903-2953 (Phone)

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