2012.04.11 - Understanding the Subprime Mortgage Crisis
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2012.04.11 - Understanding the Subprime Mortgage Crisis

Disciplina:economia monetária289 materiais9.498 seguidores
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ratios, missing debt-to-income ratio dummies, cash-out refinancing dummies, owner-occupation dummies, documentation levels, percentage of loans with prepayment penalties, mortgage rates, margins, house price appreciation since origination, composition of mortgage contract types, and origination amounts.

� FICO, the most widely known type of credit score, is a credit score developed by Fair Isaac. FICO scores are usually intended to show the likelihood that a borrower will � HYPERLINK "http://en.wikipedia.org/wiki/Default_(finance)" \o "Default (finance)" �default� on a loan; a separate score, the BNI, is used to determine the likelihood of a borrower declaring � HYPERLINK "http://en.wikipedia.org/wiki/Bankruptcy" \o "Bankruptcy" �bankruptcy�. Each credit bureau also calculates a credit score (not a FICO score) using its own proprietary model which differs from the model used by Fair Isaac Corporation.� HYPERLINK "http://en.wikipedia.org/wiki/Credit_score_(United_States)" \l "cite_note-FICOStandard-1#cite_note-FICOStandard-1" \o "" �[2]� It is not unusual for these scores to differ—by 50 (or 100� HYPERLINK "http://en.wikipedia.org/wiki/Credit_score_(United_States)" \l "cite_note-2#cite_note-2" \o "" �[3]�) points or more—for the same borrower. For the three types of credit for which a FICO score is generally used (mortgages, automobile loans, and consumer credit), lenders usually establish different cut-offs for lending,� HYPERLINK "http://en.wikipedia.org/wiki/Credit_score_(United_States)" \l "cite_note-3#cite_note-3" \o "" �[4]� reflecting the loan default risks inherent to these different types of lending. The score also depends on what credit reporting agency the data are obtained from, since not all creditors report to all three. The score Fair Isaac sells to borrowers is their consumer credit score, and borrowers can choose the agencies from which scores will be calculated.� HYPERLINK "http://en.wikipedia.org/wiki/Credit_score_(United_States)" \l "cite_note-FICOStandard-1#cite_note-FICOStandard-1" \o "" �[2]�

� Mortgage Market Statistical Annual (2007) reports securitization shares of subprime mortgages each year from 2001 to 2006 equal to 54, 63, 61, 76, 76, and 75 percent respectively.