Affiliation:
1. Carnegie Mellon University
Abstract
Abstract
In 2007, as American housing markets started to decline, the government-sponsored enterprises dramatically increased their acquisitions of low FICO and high loan-to-value mortgages. By 2008, the agencies had reversed course by decreasing their high-risk acquisitions. I develop a theory in which large lenders temporarily increase high-risk activity at the end of a boom. In the model, lenders with many outstanding mortgages have incentives to extend risky credit to prop up house prices. The increase in house prices lessens the losses they make on their outstanding portfolio of mortgages. As the bust continues, lenders slowly wind down their mortgage exposure.
Publisher
Oxford University Press (OUP)
Subject
Economics and Econometrics,Finance,Accounting
Reference47 articles.
1. The effect of large investors on asset quality evidence from subprime mortgage securities;Adelino,;Journal of Monetary Economics,2017
2. Mortgage refinancing, consumer spending, and competition evidence from the Home Affordable Refinancing Program;Agarwal,,2020
3. Banking market definition evidence from the Survey of Consumer Finances;Amel,,2008
4. Credit expansion, competition, and house prices;An,,2016
Cited by
4 articles.
订阅此论文施引文献
订阅此论文施引文献，注册后可以免费订阅5篇论文的施引文献，订阅后可以查看论文全部施引文献