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Subprime lending: An investigation of economic efficiency
Subprime lending, a fast-growing and controversial segment of the mortgage market, remains unevenly studied and poorly understood. Relying principally on a survey conducted for Freddie Mac by the Gallup Organization, we provide an overview of subprime lending, characterize the types of borrowers in...
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Published in: | Housing policy debate 2004-01, Vol.15 (3), p.533-571 |
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container_title | Housing policy debate |
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creator | Lax, Howard Manti, Michael Raca, Paul Zorn, Peter |
description | Subprime lending, a fast-growing and controversial segment of the mortgage market, remains unevenly studied and poorly understood. Relying principally on a survey conducted for Freddie Mac by the Gallup Organization, we provide an overview of subprime lending, characterize the types of borrowers in this market segment, and assess the service they receive from lenders.
We find that subprime borrowers generally are higher-risk than their prime counterparts and pay higher rates and fees for their mortgages. They are disproportionately minority and lower income, older, less well educated, less financially sophisticated, and less likely to search for the best interest rate when applying for a mortgage. We use three measures to assess the efficiency of the subprime market. Although none of them is conceptually conclusive, and each has its flaws of execution, all three suggest that concerns over the relative efficiency of the subprime market may be warranted. |
doi_str_mv | 10.1080/10511482.2004.9521513 |
format | article |
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We find that subprime borrowers generally are higher-risk than their prime counterparts and pay higher rates and fees for their mortgages. They are disproportionately minority and lower income, older, less well educated, less financially sophisticated, and less likely to search for the best interest rate when applying for a mortgage. We use three measures to assess the efficiency of the subprime market. Although none of them is conceptually conclusive, and each has its flaws of execution, all three suggest that concerns over the relative efficiency of the subprime market may be warranted.</description><identifier>ISSN: 1051-1482</identifier><identifier>EISSN: 2152-050X</identifier><identifier>DOI: 10.1080/10511482.2004.9521513</identifier><language>eng</language><publisher>Abingdon: Taylor & Francis Group</publisher><subject>Credit ; Discrimination ; Economic efficiency ; Efficiency ; Housing finance ; Housing policy ; Market failure ; Market segments ; Mortgages ; Policy studies ; Studies ; Subprime and predatory lending ; Subprime lending</subject><ispartof>Housing policy debate, 2004-01, Vol.15 (3), p.533-571</ispartof><rights>Copyright Taylor & Francis Group, LLC 2004</rights><rights>Copyright Fannie Mae 2004</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c428t-c0cc92f288ce103cf85af4a3ff18466e2caa7e24eb74bc33050fbe064abc9bd33</citedby><cites>FETCH-LOGICAL-c428t-c0cc92f288ce103cf85af4a3ff18466e2caa7e24eb74bc33050fbe064abc9bd33</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,780,784,27866,27924,27925,33223,33224</link.rule.ids></links><search><creatorcontrib>Lax, Howard</creatorcontrib><creatorcontrib>Manti, Michael</creatorcontrib><creatorcontrib>Raca, Paul</creatorcontrib><creatorcontrib>Zorn, Peter</creatorcontrib><title>Subprime lending: An investigation of economic efficiency</title><title>Housing policy debate</title><description>Subprime lending, a fast-growing and controversial segment of the mortgage market, remains unevenly studied and poorly understood. Relying principally on a survey conducted for Freddie Mac by the Gallup Organization, we provide an overview of subprime lending, characterize the types of borrowers in this market segment, and assess the service they receive from lenders.
We find that subprime borrowers generally are higher-risk than their prime counterparts and pay higher rates and fees for their mortgages. They are disproportionately minority and lower income, older, less well educated, less financially sophisticated, and less likely to search for the best interest rate when applying for a mortgage. We use three measures to assess the efficiency of the subprime market. Although none of them is conceptually conclusive, and each has its flaws of execution, all three suggest that concerns over the relative efficiency of the subprime market may be warranted.</description><subject>Credit</subject><subject>Discrimination</subject><subject>Economic efficiency</subject><subject>Efficiency</subject><subject>Housing finance</subject><subject>Housing policy</subject><subject>Market failure</subject><subject>Market segments</subject><subject>Mortgages</subject><subject>Policy studies</subject><subject>Studies</subject><subject>Subprime and predatory lending</subject><subject>Subprime lending</subject><issn>1051-1482</issn><issn>2152-050X</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2004</creationdate><recordtype>article</recordtype><sourceid>7TQ</sourceid><sourceid>8BJ</sourceid><recordid>eNp9kDtPwzAUhS0EEqXwE5AiBrYUv5I6TFQVL6kSAyCxWc6tXblK7GInoPx7HLUsDEx3-c7RuR9ClwTPCBb4huCCEC7ojGLMZ1VBSUHYEZqkS3Nc4I9jNBmZfIRO0VmMW4wpZYJOUPXa17tgW5012q2t29xmC5dZ96VjZzeqs95l3mQavPOthUwbY8FqB8M5OjGqifricKfo_eH-bfmUr14en5eLVQ6cii4HDFBRQ4UATTADIwpluGLGEMHLUlNQaq4p1_Wc18BY2mtqjUuuaqjqNWNTdL3v3QX_2adZsrURdNMop30fJROYlKLkCbz6A259H1zaJiljZF4JUSWo2EMQfIxBGzl-r8IgCZajTflrU4425cFmyt3tc9YZH1r17UOzlp0aGh9MUA5sWvJ_xQ-ES3tX</recordid><startdate>20040101</startdate><enddate>20040101</enddate><creator>Lax, Howard</creator><creator>Manti, Michael</creator><creator>Raca, Paul</creator><creator>Zorn, Peter</creator><general>Taylor & Francis Group</general><general>Taylor & Francis Ltd</general><scope>AAYXX</scope><scope>CITATION</scope><scope>7TQ</scope><scope>8BJ</scope><scope>DHY</scope><scope>DON</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>20040101</creationdate><title>Subprime lending: An investigation of economic efficiency</title><author>Lax, Howard ; Manti, Michael ; Raca, Paul ; Zorn, Peter</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c428t-c0cc92f288ce103cf85af4a3ff18466e2caa7e24eb74bc33050fbe064abc9bd33</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2004</creationdate><topic>Credit</topic><topic>Discrimination</topic><topic>Economic efficiency</topic><topic>Efficiency</topic><topic>Housing finance</topic><topic>Housing policy</topic><topic>Market failure</topic><topic>Market segments</topic><topic>Mortgages</topic><topic>Policy studies</topic><topic>Studies</topic><topic>Subprime and predatory lending</topic><topic>Subprime lending</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Lax, Howard</creatorcontrib><creatorcontrib>Manti, Michael</creatorcontrib><creatorcontrib>Raca, Paul</creatorcontrib><creatorcontrib>Zorn, Peter</creatorcontrib><collection>CrossRef</collection><collection>PAIS Index</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>PAIS International</collection><collection>PAIS International (Ovid)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Housing policy debate</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Lax, Howard</au><au>Manti, Michael</au><au>Raca, Paul</au><au>Zorn, Peter</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Subprime lending: An investigation of economic efficiency</atitle><jtitle>Housing policy debate</jtitle><date>2004-01-01</date><risdate>2004</risdate><volume>15</volume><issue>3</issue><spage>533</spage><epage>571</epage><pages>533-571</pages><issn>1051-1482</issn><eissn>2152-050X</eissn><abstract>Subprime lending, a fast-growing and controversial segment of the mortgage market, remains unevenly studied and poorly understood. Relying principally on a survey conducted for Freddie Mac by the Gallup Organization, we provide an overview of subprime lending, characterize the types of borrowers in this market segment, and assess the service they receive from lenders.
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source | International Bibliography of the Social Sciences (IBSS); PAIS Index; Taylor and Francis Social Sciences and Humanities Collection |
subjects | Credit Discrimination Economic efficiency Efficiency Housing finance Housing policy Market failure Market segments Mortgages Policy studies Studies Subprime and predatory lending Subprime lending |
title | Subprime lending: An investigation of economic efficiency |
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