(found on fark)Ten Myths about Subprime MortgagesYuliya Demyanyk
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.
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Cleveland FedI highly recommend checking out the whole thing, but here's the myths that are debunked:
MYTH #1 Subprime mortgages went only
to borrowers with impaired credit
MYTH #2 Subprime mortgages promoted homeownership
MYTH #3 Declines in home values caused the subprime crisis in the United States
MYTH #4 Declines in mortgage underwriting standards triggered the subprime crisis
MYTH #5 Subprime mortgages failed because people used homes as ATMs
MYTH #6 Subprime mortgages failed because of mortgage rate resets
MYTH #7 Subprime borrowers with hybrid mortgages were offered (low) “teaser rates”
MYTH #8 The subprime mortgage crisis in the United States was totally unexpected
MYTH #9 The subprime mortgage crisis in the United States is unique in its origins
MYTH #10 The subprime mortgage market was too small to cause big problems
Please take the time to read it, it's a real eye-opener.