2009: Underwriting, Mortgage Lending, and House Prices: 1996–2008
Underwriting standards for residential mortgages (henceforth: underwriting) are now generally regarded as having been unusually lax during the mid-2000s. Underwriting then tightened up again during the financial crisis that began in 2007. The laxity of underwriting and its ensuing tightness since the mid-1990s likely contributed considerably to the unprecedented rise and subsequent fall of mortgage volumes and house prices.
KeywordsGross Domestic Product House Price Federal Reserve Mortgage Market Principal Component Method
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