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Subprime Markets, the Role of GSEs, and Risk-Based Pricing

Report Acceptance Date: 
March 2002 (68 pages)
Posted Date:   
March 1, 2002

Despite the recent growth in the subprime mortgage market, little is known about subprime borrowers, their default experience, or subprime lenders’ underwriting practices. This report will help to expand what is known by looking at lending practices in the subprime mortgage market and the current and potential role of Fannie Mac and Freddie Mac. The report is based on a review of relevant literature and a series of interviews with subprime and prime lenders and representatives of consumer groups, regulators, investment banks and trade associations.