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

24 Pages Posted: 28 Dec 2012

See all articles by Jim Berkovec

Jim Berkovec

affiliation not provided to SSRN

Yan Chang

Federal Home Loan Mortgage Corporation (FHLMC)

Douglas A. McManus

Federal Home Loan Mortgage Corporation (FHLMC)

Date Written: December 2012

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 article 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.

Suggested Citation

Berkovec, Jim and Chang, Yan and McManus, Douglas A., Alternative Lending Channels and the Crisis in U.S. Housing Markets (December 2012). Real Estate Economics, Vol. 40, pp. S8-S31, 2012, Available at SSRN: https://ssrn.com/abstract=2194280 or http://dx.doi.org/10.1111/j.1540-6229.2012.00352.x

Jim Berkovec (Contact Author)

affiliation not provided to SSRN

No Address Available

Yan Chang

Federal Home Loan Mortgage Corporation (FHLMC) ( email )

8200 Jones Branch Road
McLean, VA 22101
United States

Douglas A. McManus

Federal Home Loan Mortgage Corporation (FHLMC) ( email )

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

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