Understanding the Securitization of Subprime Mortgage Credit: Federal Reserve Bank of New York Staff Report no. 318

Download or read book Understanding the Securitization of Subprime Mortgage Credit: Federal Reserve Bank of New York Staff Report no. 318 written by Adam B. Ashcraft and published by Lulu.com. This book was released on 2012-08-04 with total page 84 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is an overview of the subprime mortgage securitization process and seven key informational frictions that arise. The authors discuss the ways that market participants work to minimize these frictions and speculate on how this process broke down. They offer a complete picture of the subprime borrower and the subprime loan, discussing both predatory borrowing and predatory lending. They present the key structural features of a typical subprime securitization, document how rating agencies assign credit ratings to mortgage-backed securities, and outline how these agencies monitor the performance of mortgage pools over time. (Originally published as a Federal Reserve Bank of New York Staff Report)