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Smith
Faculty Opinion Article
The 30 Seconds Outlook
January, 2008
Were
problems in the subprime mortgage
market imminent long before the
actual crisis showed signs in 2007?
Our answer is yes … .” -- Yuliya
Demyanyk and Otto Van Hemert,
“Understanding the Subprime Mortgage
Crisis (2007).”
“… [D]uring the
explosive growth of the subprime
market in 2001-2006 the quality of
loans … deteriorated and
underwriting criteria loosened.
…[T]he rise and fall of the subprime
market resembles a classic lending
boom-bust scenario, in which
unsustainable growth leads to the
collapse of the market. … [S]ecuritizers
were to some extent aware of it, but
a high house price appreciation in
2003-2005 masked the true riskiness
of subprime mortgages.”
by John A. Haslem
John A. Haslem,
Professor Emeritus of Finance,
University of Maryland.
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