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The subprime mortgage has been the most attractive service for a consumer because real estate purchase mortgage loan is provided despite negative indices characterizing the borrower. The share of such borrowers on the Russian market makes up about 70 %. If Russian banks began to provide subprime mortgages today, it would immediately liven real estate market, and consequently other goods and service markets. However, anyway there would come the moment when the “soap bubble” burst, that is to say that borrowers would not be able to cope with the increased interest rate and that would result into mass non-payments and bankruptcies. It is necessary to analyse all positive and negative sides and to offer the market the model and mechanisms with the help of which the lessons of the 2008—2009 economic crisis would be taken into account. Subprime mortgage loan, as well as any other one, is divided into two assets: initial payment and principal amount of a loan. First lesson: it is necessary to separate these two assets and not to link them in one. Using the possibilities of a microfinance loan (credit), it is necessary to provide borrowers with the sum of the initial payment so that they match standard terms of lending. Second lesson: it is not allowed to register borrower’s apartment if the whole sum of the loan isn't paid out, it must be registered in the name of the builder or his sales agent. Firstly, it will inspire the borrower to force advance payments for a mortgage loan. Secondly, and it results from possible legal judgments on confiscation of the real estate registered in payment for another loan, that subsequently can lead to the loss of the rights to the apartment. The third lesson is the question: when is the niche for this kind of business is formed? A businessman has to consider all factors, work out or follow the mechanisms recommended by economists in order to “replace” the government and at the same time abide by the laws. On the other hand, the government must welcome and stimulate these initiatives because, in fact, commercial structures will solve one of its constitutional duties / Субстандартная ипотека остает-ся наиболее привлекательной услугой для потребителя ввиду того, что ипотечный кредит на покупку жилой недвижимости выдается несмотря на отрицательные характеристики заемщика. Доля таких заемщиков на российском рынке около 70 %. И если сегодня российские банки начали бы выдавать субстандартные ипотечные кредиты, то это немедленно оживило бы рынок недвижимости, а следом за ним и другие рынки товаров и услуг. Однако все равно наступил бы момент, когда «мыльный пузырь» лопнул, а именно: заемщики не смогли бы справиться с повышенной процентной ставкой, что привело бы к массовым неплатежам и банкротствам. Необходимо проанализировать все положительные и отрицательные стороны и предложить рынку модели и механизмы, при которых были бы учтены уроки экономического кризиса 2008—2009 гг. Субстандартная ипотека, как и любая другая, делится на два актива: первоначальный взнос и основная сумма кредита. Первый урок: нужно делить эти два актива и не увязывать их между собой в один. Используя возможности микрофинансового займа (кредита), финансировать заемщиков на сумму первоначального взноса, приводя их к стандартным условиям кредитования. Второй урок: нельзя регистрировать квартиру на заемщика, пока не выплачена вся сумма кредита, она должна быть зарегистрирована на застройщика или его агенте по продаже. Во-первых, это будет стимулиро-вать заемщика форсировать досрочными выплатами расчеты по ипотечному кредиту. Во вторых, и это вытекает из возможных судебных решений по конфискации зарегистрированной в собственность жилой недвижимости в счет обеспечения другого долга, в последующем это может привести к потере прав на квартиру. Третий урок — это вопрос: когда образуется ниша для бизнеса в этом виде услуг? Предприниматель должен учесть все факторы, разработать или следовать механизмам, рекомендованным экономистами, чтобы «заместить» государство, при этом следовать его законам. С другой стороны, государство должно приветствовать и стимулировать данные инициативы, так как, по сути, коммерческие структуры будут решать одну из его консти-туционных обязанностей

We investigate whether race and ethnicity influenced subprime loan pricing during 2005, the peak of the subprime mortgage expansion. We combine loan-level data on the performance of non-prime securitized mortgages with individual- and neighborhood-level data on racial and ethnic characteristics for metropolitan areas in California and Florida. Using a model of rate determination that accounts for predicted loan performance, we evaluate the differences in subprime mortgage rates in terms of racial and ethnic groups and neighborhood characteristics. We find evidence of adverse pricing for Blacks and Hispanics. The evidence of adverse pricing is strongest for purchase mortgages and mortgages originated by non-depository institutions.

Concentrated poverty has been said to impose a double burden on those that confront it. In addition to an individual's own financial constraints, institutions and social networks of poor neighborhoods can further limit access to quality services and resources for those that live there. This study contributes to the characterization of subprime lending in poor neighborhoods by including a spatial dimension to the analysis, in an attempt to capture social – endogenous and exogenous interaction – effects differences in poor and less poor neighborhoods. The analysis is applied to 2004–2006 census tract level data in Cuyahoga County, home to Cleveland, OH, a region that features urban neighborhoods highly segregated by income and race. The patterns found in poor neighborhoods suggest stronger social effects inducing subprime lending in comparison to less poor neighborhoods.

This paper explores the link between the house-price expectations of mortgage lenders and the extent of subprime lending. It argues that bubble conditions in the housing market are likely to spur subprime lending, with favorable price expectations easing the default concerns of lenders and thus increasing their willingness to extend loans to risky borrowers. Since the demand created by subprime lending feeds back onto house prices, such lending also helps to fuel an emerging housing bubble. These ideas are illustrated in a theoretical model, and tentative support is found in empirical work exploring the connection between price expectations and the extent of subprime lending. † The views expressed in this paper are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Philadelphia, the Federal Reserve Board of Governors, or the Federal Reserve System. This paper is available free of charge at http://www.philadelphiafed.org/ research-and-data/publications/working-papers./

The long-horizon event study methodology is used to document the severe impact of the US subprime mortgage crisis on the Colombian economy. The estimated parameter of a constantmean return model is used to derive the “abnormal return” on the market portfolios of Colombia over its selected event window. Analyses of the results reveal that the US subprime mortgage crisis negatively affected both the Colombian and the US equity markets almost identically in terms of cumulative percentage reductions and timing. Statistic testing results seem to support the qualitative observation. This phenomenon can be attributable to the recent multilateral and regional trade agreements that increase the flow of trade and foreign direct investment to Colombia. Resumen El estudio metodológico de horizonte largo es usado para documentar el impacto severo de la crisis de la finca raíz de Estados Unidos en la Economía Colombiana. El parámetro estimado de la constante del retorno del modelo es usado para derivar el retorno anormal en el mercado de portafolios sobre su selección de la ventana de evento. Análisis de estos resultados revelan que la crisis de la finca raíz en Estados Unidos afectó negativamente ambos mercados de acciones en Estados Unidos y Colombia casi idénticamente en términos de reducción de porcentaje cumulativo y tiempo. Resultados de pruebas estadísticas parecen soportar la observación. Este fenómeno puede ser atribuido a los recientes acuerdos de comercio multilaterales y regionales que incrementan el flujo de comercio e inversión extranjera directa a Colombia.

We compare the twelve-month default probability among subprime borrowers differing only in the number of months before their first lump-sum property tax payment, after which time they may be exposed to reduced liquidity. We show that borrowers with an earlier property tax bill—within three months of origination—have 2% to 6% higher first-year default rates than borrowers facing their first property tax bill ten to twelve months after origination. Lump-sum property tax payments appear to produce a persistent state of low liquidity, the length of which raises the likelihood of default. These results are about one-third the effect size of a transition from 10% positive to 20% negative equity found in the literature. This paper provides causal evidence that liquidity constraints are important predictors of mortgage default.

On close inspection many of the most popular explanations for the subprime crisis turn out to be myths. Empirical research shows that the causes of the subprime mortgage crisis and its magnitude were more complicated than mortgage interest rate resets, declining underwriting standards, or declining home values. Nor were its causes unlike other crises of the past. The subprime crisis was building for years before showing any signs and was fed by lending, securitization, leveraging, and housing booms.

A central question in the literature on mortgage default is at what point underwater homeowners walk away from their homes even if they can afford to pay. We study borrowers from Arizona, California, Florida, and Nevada who purchased homes in 2006 using non-prime mortgages with 100 percent financing. Almost 80 percent of these borrowers default[ed] by the end of the observation period in September 2009. After distinguishing between defaults induced by job losses and other income shocks from those induced purely by negative equity, we find that the median borrower does not strategically default until equity falls to -62 percent of their home's value. This result suggests that borrowers face high default and transaction costs. Our estimates show that about 80 percent of defaults in our sample are the result of income shocks combined with negative equity. However, when equity falls below -50 percent, half of the defaults are driven purely by negative equity. Therefore, our findings lend support to both the 'double-trigger' theory of default and the view that mortgage borrowers exercise the implicit put option when it is in their interest.

What began as a downturn in the U.S. housing sector in mid-2007 soon mushroomed into a global financial crisis by September 2008. Why was the crisis triggered in the United States renowned for its resilient and innovative economic system? Why the crisis, which began with the implosion of a relatively small part of the U.S. housing market (the subprime mortgages) quickly morphed into a credit crunch, plunging the world economy in the worst financial crisis since the Great Depression? And, what explains the failure of both the market participants and public authorities to anticipate (at least initially) the depth and gravity of the crisis? In contrast to conventional explanations that see the crisis rooted in the procyclicality of the financial system, or the result of Wall Street greed and incompetence, this article provides a political-economy analysis of the complex series of events that lead to U.S. subprime meltdown. Specifically, the paper illustrates that the subprime crisis is fundamentally the result of massive regulatory failure in the United States. Although both market actors and regulators failed to properly assess the risks of complex assets, powerful lawmakers (both Republicans and Democrats) and regulators whose responsibility was to maintain due diligence against potentially destructive market failure, clearly failed in their responsibility.

The purpose of this study is two-fold: first, to explain the demise of subprime and Alt-A mortgage markets in the U.S. from the viewpoint of measuring and managing mortgage credit risk; and secondly, to discuss several policy lessons that can be learned from the market meltdown. To that end, three tiers of mortgage credit models are elaborated, including the scoring (or risk rank-ordering), risk-based pricing, and ¡§sizing¡¨ (or the analytics used in determining subordination levels of credit-sensitive mortgage backed security (MBS) deals) models. Using these as conceptual underpinning, empirical evidence is surveyed to document key contributing factors to the market demise. Those that are identified include the non-availability of reliable mortgage performance data, lack of theory as well as industry best-practices in performing simulation-based mortgage risk assessments, complex and arcane structures of mortgage backed securities, and information asymmetry among the parties involved in the security transactions. The overall conclusion derived is that the participants to these market segments surpass their risk management capabilities in globalizing funding for subprime and Alt-A mortgages. The policy lessons emphasized are the importance of the infrastructure of proper risk assessment and risk-based pricing, as well as prudent and transparent MBS products along with periodic information disclosure.

We explore the types of data used to characterize risky subprime lending and consider the geographic dispersion of subprime lending. First, we describe the strengths and weaknesses of three different datasets on subprime mortgages using information from LoanPerformance, HUD, and HMDA. These datasets embody different definitions of subprime mortgages. We show that estimates of the number of subprime originations are somewhat sensitive to which types of mortgages are categorized as subprime. Second, we describe what parts of the country and what sorts of neighborhoods had more subprime originations in 2005, and how these patterns differed for purchase and refinance mortgages. Subprime originations appear to be heavily concentrated in fast-growing parts of the country with considerable new construction, such as Florida, California, Nevada, and the Washington DC area. These locations saw house prices rise at faster-than-average rates relative to their own history and relative to the rest of the country. However, this link between construction, house prices, and subprime lending is not universal, as other markets with high house price growth such as the Northeast did not see especially high rates of subprime usage. Subprime loans were also heavily concentrated in Zip codes with more residents in the moderate credit score category and more black and Hispanic residents. Areas with lower income and higher unemployment had more subprime lending, but these associations are smaller in magnitude.

Over the last decade, the United States had experienced a boom and bust in the subprime mortgage market. The ups and downs of the subprime mortgage market became a primary factor triggering the most severe global economic recession since the Great Depression. The dissertation contributes to the literature by inquiring whether the subprime lending has exacerbated social inequity between subprime neighborhoods and other neighborhoods, through analyzing the subprime mortgage market in the Philadelphia MSA from 2000 through 2010, and focusing on two research questions: (1) the spatial distribution of subprime mortgages across census tracts; (2) the relationship between subprime intensities and housing price variations across zip-code areas. As the dissertation's study area expands from an urban to a MSA, spatial heterogeneity merits attention in this relative huge area. As a result, this dissertation not only employs a global, Ordinary Least Squares (OLS) model, but also a local, Geographically Weighted Regression (GWR) model to examine spatial variations across different neighborhoods. For the first research question, the dissertation finds: (1) a higher concentration of higher-priced mortgage for purchase and refinance in tracts with higher proportion of African-American and Hispanic residents, lower median household incomes, higher-unemployment rates, lower self-employment rates, and higher capitalization rates, after controlling for other variables; (2) the association between higher-priced mortgages and explanatory variables varies across census tracts. Because the dynamics of neighborhood subprime originations are heterogamous, the association between subprime mortgage origination and socioeconomic characteristics may be stronger in some neighborhoods than other neighborhoods. For the second research question, the dissertation finds: (1) subprime mortgage shares have a significant negative association with housing price appreciations during the housing boom period (2001-2006); (2) subprime mortgage shares have a significant positive association with housing price depreciations during the housing bust period (2006-2010); and (3) the association between housing price variations and explanatory variables differs across geographic submarkets within the Philadelphia region. The result confirms that areas where more residents obtained subprime mortgages have suffered more severely than other from the housing market's ups and downs over the last decade. The empirical results can draw broad policy implications. The primary implication is that it is time for the federal government to rethink its homeownership policy. Increased homeownership levels arising from the expansion of subprime mortgages are not sustainable, and subprime lending has exacerbated social inequity between subprime neighborhoods and other neighborhoods. The second implication is that the government needs to enforce the fair lending laws, because the cluster of subprime mortgage origination reflects the unequal opportunities of prime mortgage accessibility across different neighborhoods. The third implication is that the government needs to promote place-based policy making. As the GWR demonstrates, the dynamics of the mortgage market and housing market are uneven across different neighborhoods. Therefore, place-based making can increase the efficiency of public policy. These implications based on the dissertation's empirical results are helpful for designing more efficient, effective, and sustainable housing policies of the United States.

In this brief, we provide an overview of patterns of subprime lending, as well as trends in foreclosures and REOs, in suburban communities compared to inner-cities. We also explore the relationship between foreclosures in suburban areas and the increased suburbanization of poverty. We find that the vast majority of foreclosures –nearly three out of four (73.1 percent)—have been in suburban areas, and that suburban neighborhoods with higher rates of poverty are more likely to experience higher foreclosure rates. This is of concern because the mechanisms for addressing the challenges associated with concentrated foreclosures can be more difficult to implement in suburban areas; suburbs may have smaller local governments, fewer nonprofits, and a more dispersed urban form, making it difficult for cities or nonprofits to administer programs or for residents to access them. Because the distribution of foreclosed homes has significant implications for the long-term stability of suburban neighborhoods, increased resources and attention should be devoted to developing foreclosure responses that take into account the capacity and access challenges that are unique to suburban neighborhoods.

No. In this paper we use a regression discontinuity approach to investigate whether affordable housing policies influenced origination or affected prices of subprime mortgages. We use merged loan-level data on non-prime securitized mortgages with individual- and neighborhood-level data for California and Florida. We find no evidence that lenders increased subprime originations or altered pricing around the discrete eligibility cutoffs for the Government Sponsored Enterprises (GSEs) affordable housing goals or the Community Reinvestment Act. Our results indicate that the extensive purchases of risky private-label mortgage-backed securities by the GSEs were not due to affordable housing mandates.

En el presente artículo se detallan algunos de los fallos del sistema que han sido aprovechados por parte de los máximos responsables del orden mundial para proseguir de manera irresponsable e inconsciente con sus ambiciosos objetivos de riqueza y poder, sin atender a las posibles consecuencias de las que ya muchos expertos habían avisado sin ser escuchados. La crisis financiera y económica global en la que nos encontramos en la actualidad ha sido originada por una serie de diversos factores y situaciones que quedan lejos del conocimiento y del alcance de las personas normales. Hay un aspecto que destaca entre todos esos factores: las acciones irregulares e incluso negligentes de personas que ocupan altos cargos en grandes empresas, en el sistema bancario y también en la política. Las consecuencias de tales actos ya son conocidas por todos y las repercusiones finales corren a cuenta de los ciudadanos de a pie, que aguantan resignados toda clase de injusticias y abusos por parte de los mandatarios, quienes, amparados en una Ley muy favorable a sus intereses, no dudan en exprimir al máximo la paciencia y la vida de sus propios paisanos. Actualmente estamos viviendo un momento de máxima tensión en nuestro país. La prima de riesgo alcanza cotas de récord histórico, el cuarto banco más importante de España, Bankia, está al borde del abismo, mientras el Gobierno, que sigue repercutiendo todas las consecuencias hacia las personas, pretende salvar dicha entidad bancaria inyectando miles de millones de Euros salidos de las arcas públicas. Por su parte, la Unión Europea no hace más que ejercer presión para que los ciudadanos "nos apretemos el cinturón" sin darse cuenta de que prácticamente nos están cortando la circulación sanguínea a la altura de la cintura. ¿Hasta cuándo durará esto? ¿Reaccionará el pueblo o seguirá aguantando esta situación opresiva y abusiva? This article details some of the system failures that have been exploited by the heads of the world order to continue with their ambitious targets of power and richness in an irresponsible and unconscious way, not considering the possible consequences which many experts had already warned about. The financial and economic global crisis in which we are currently has been originated by some diverse factors and situations that are far from people�s knowledge. There's one aspect that stands out among all those factors: the irregular and negligent actions made by bank managers, by important businessmen and by political leaders. The consequences of such acts are known by everyone and the repercussions are taken by the resigned citizens, who endure all kinds of injustices and abuses committed by those leaders, which are protected by a very favorable Law and which don't hesitate to exploit to the maximum the lifes of their own compatriots. We are now living some pretty tense moments in our country. The risk premium has reached a historical record, the fourth largest bank in Spain, Bankia, is on the brink of ruin, while the Government is intending to save that entity with public money. Meanwhile, the European Union does nothing but pressurize us into tightening our belts, not realizing that they're cutting us off the circulation in our waists. Until when is this situation going to last? Will we react or will we keep enduring this aggressive and abusive situation?

En el presente artículo se detallan algunos de los fallos del sistema que han sido aprovechados por parte de los máximos responsables del orden mundial para proseguir de manera irresponsable e inconsciente con sus ambiciosos objetivos de riqueza y poder, sin atender a las posibles consecuencias de las que ya muchos expertos habían avisado sin ser escuchados. La crisis financiera y económica global en la que nos encontramos en la actualidad ha sido originada por una serie de diversos factores y situaciones que quedan lejos del conocimiento y del alcance de las personas normales. Hay un aspecto que destaca entre todos esos factores: las acciones irregulares e incluso negligentes de personas que ocupan altos cargos en grandes empresas, en el sistema bancario y también en la política. Las consecuencias de tales actos ya son conocidas por todos y las repercusiones finales corren a cuenta de los ciudadanos de a pie, que aguantan resignados toda clase de injusticias y abusos por parte de los mandatarios, quienes, amparados en una Ley muy favorable a sus intereses, no dudan en exprimir al máximo la paciencia y la vida de sus propios paisanos. Actualmente estamos viviendo un momento de máxima tensión en nuestro país. La prima de riesgo alcanza cotas de récord histórico, el cuarto banco más importante de España, Bankia, está al borde del abismo, mientras el Gobierno, que sigue repercutiendo todas las consecuencias hacia las personas, pretende salvar dicha entidad bancaria inyectando miles de millones de Euros salidos de las arcas públicas. Por su parte, la Unión Europea no hace más que ejercer presión para que los ciudadanos "nos apretemos el cinturón" sin darse cuenta de que prácticamente nos están cortando la circulación sanguínea a la altura de la cintura. ¿Hasta cuándo durará esto? ¿Reaccionará el pueblo o seguirá aguantando esta situación opresiva y abusiva?, This article details some of the system failures that have been exploited by the heads of the world order to continue with their ambitious targets of power and richness in an irresponsible and unconscious way, not considering the possible consequences which many experts had already warned about. The financial and economic global crisis in which we are currently has been originated by some diverse factors and situations that are far from people�s knowledge. There's one aspect that stands out among all those factors: the irregular and negligent actions made by bank managers, by important businessmen and by political leaders. The consequences of such acts are known by everyone and the repercussions are taken by the resigned citizens, who endure all kinds of injustices and abuses committed by those leaders, which are protected by a very favorable Law and which don't hesitate to exploit to the maximum the lifes of their own compatriots. We are now living some pretty tense moments in our country. The risk premium has reached a historical record, the fourth largest bank in Spain, Bankia, is on the brink of ruin, while the Government is intending to save that entity with public money. Meanwhile, the European Union does nothing but pressurize us into tightening our belts, not realizing that they're cutting us off the circulation in our waists. Until when is this situation going to last? Will we react or will we keep enduring this aggressive and abusive situation?

Although similar in many ways, subprime hybrids were really different from prime hybrids.

This article presents arguments and evidence suggesting that the bankruptcy abuse reform (BAR) of 2005 may have been one contributor to the destabilizing surge in subprime foreclosures. Before BAR took effect, overly indebted borrowers could file bankruptcy to free up income to pay their mortgage by having their credit card and other unsecured debts discharged. BAR eliminated that option for better-off filers through a means test and other requirements, thus making it harder to save one’s home by filing bankruptcy. By way of evidence, the authors show that the impact of BAR was greater in U.S. states where one would expect it to have a larger impact — namely, in states with high bankruptcy exemptions. Filers in low-exemption states were not very protected before BAR, so they were less likely to be affected by the reform. The authors estimate that for a state with an average home equity exemption, the subprime foreclosure rate after BAR rose 11 percent relative to average before the reform; given the number of subprime mortgages in the United States, that figure translates into 29,000 additional subprime foreclosures per quarter nationwide attributable to BAR.

The economic history of the United States is riddled with financial crises and banking panics. During the nineteenth-century, eight major such episodes occurred. In the period following World War II, some believed that these crises would no longer happen, and that the U.S. had reached a time of everlasting financial stability and sustainable growth. The Savings and Loans Crisis of the 1980s, the 2001 dot-com bust and the 2007 housing bubble that led to the current global financial crises demonstrate that these phenomena are still reoccurring. Regulators and policy makers should keep aware of the recurrence of such crises.

Most US house price models break down in the mid-2000's, due to the omission of exogenous changes in mortgage credit supply (associated with the sub-prime mortgage boom) from house price-to-rent ratio and inverted housing demand models. Previous models lack data on credit constraints facing first-time home-buyers. Incorporating a measure of credit conditions - the cyclically adjusted loan-to-value ratio for first time buyers – into house price to rent ratio models yields stable long-run relationships, more precisely estimated effects, reasonable speeds of adjustment and improved model fits.

The U.S. house price boom has been linked to an unsustainable easing of mortgage credit standards. However, standard time series models of U.S. house prices omit credit constraints and perform poorly in the 2000s. We incorporate data on credit constraints for first-time buyers into a model of U.S. house prices based on the (inverted) demand for housing services. The model yields not only a stable long-run cointegrating relationship, a reasonable speed of adjustment, plausible income and price elasticities and an improved fit, but also sensible estimates of tax credit effects and the possible bottom in real house prices.

A growing literature suggests that housing policy, embodied by the Community Reinvestment Act (CRA) and the affordable housing goals of the government sponsored enterprises, may have caused the subprime crisis. The conclusions drawn in this literature, for the most part, have been based on associations between aggregated national trends. In this paper we examine more directly whether these programs were associated with worse outcomes in the mortgage market, including delinquency rates and measures of loan quality. We rely on two empirical approaches. In the first approach, which focuses on the CRA, we conjecture that historical legacies create significant variations in the lenders that serve otherwise comparable neighborhoods. Because not all lenders are subject to the CRA, this creates a quasi-natural experiment of the CRA's effect. We test this conjecture by examining whether neighborhoods that have been disproportionally served by CRA-covered institutions historically experienced worse outcomes. The second approach takes advantage of the fact that both the CRA and GSE goals rely on clearly defined geographic areas to determine which loans are favored by the regulations. Using a regression discontinuity approach, our tests compare the marginal areas just above and below the thresholds that define eligibility, where any effect of the CRA or GSE goals should be clearest. We find little evidence that either the CRA or the GSE goals played a significant role in the subprime crisis. Our lender tests indicate that areas disproportionately served by lenders covered by the CRA experienced lower delinquency rates and less risky lending. Similarly, the threshold tests show no evidence that either program had a significantly negative effect on outcomes.

In this paper we conduct an empirical investigation of how neighborhood mortgage adoption contagion affects mortgage product choice, with an emphasis on Hispanic borrowers. We use loan-level mortgage data for metropolitan areas in California and Florida during 2004 and 2005, the peak years of the subprime mortgage boom. We identify an important and statistically significant effect of contagion on consumer choice of hybrid mortgage products that were popular during this period, especially for Hispanic borrowers.