Understanding the Securitization of Subprime Mortgage Credit
This paper is a largely a primer on the securitization of subprime mortgage loans. We start with an overview of the seven key informational frictions involved in this process, discuss how market participants work to minimize these frictions, and speculate on how this process broke down. We continue with a complete picture of the subprime borrower and the subprime loan, discussing both predatory borrowing and predatory lending.
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