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This paper presents evidence on the impact of the housing bubble, flood of high risk mortgage lending, and subsequent meltdown in homeownership. We point to agency and information problems in the mortgage origination and securitization market; incomplete risk transfer; and underassessment of...
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future house prices which, in turn, led to a collapse in lending standards. A common feature of all bubbles which complicates … economic fallout from the recent financial crisis, central bank views on the use of monetary policy to lean against bubbles …
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Over the course of the recent house price bubble in the United States, the price of homes rose rapidly from 1999 Q4 to 2005 Q4 (11.3% annually as measured by the Case-Shiller index, and 8.4% annually as measured by the Federal Housing Financing Agency) but slowly as measured by owner equivalent...
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