This paper provides the first rigorous assessment of the homeownership experiences of subprime borrowers. We consider homeowners who used subprime mortgages to buy their homes, and estimate how often these borrowers end up in foreclosure. In order to evaluate these issues, we analyze...

understanding of housing market developments on general activities. We use the estimated model to conduct policy experiments and find that consumption responds nonlinearly to changes in housing wealth with an average marginal propensity to consume out of housing wealth of about 5 percent.