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Article: Ten myths about subprime mortgages.
- Article from:
- Economic Commentary (Cleveland)
- Article date:
- May 1, 2009
- Author:
CopyrightCOPYRIGHT 2009 Federal Reserve Bank of Cleveland. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Subprime mortgages have been getting a lot of attention in the United States since 2000, when the number of subprime loans being originated and refinanced shot up rapidly. The attention intensified in 2007, when defaults on subprime loans began to skyrocket. Researchers, policymakers, and the public have tried to identify the factors that explained these defaults.
Unfortunately, many of the most popular explanations that have emerged for the subprime crisis are, to a large extent, myths. On close inspection, these explanations are not supported by empirical research.
Myth 1: Subprime mortgages went only to borrowers with impaired credit
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