Subprimes didn’t perform worse than prime loans: Philadelphia Fed
Privately securitised loans performed worse than non-securitised loans, especially in prime mortgage markets, argues a working paper published by the Philadelphia Federal Reserve. Securitization and Mortgage Default: Reputation vs. Adverse Selection also finds that subprime loans did not necessarily perform worse than their prime counterparts.
The author uses a data set that captures 75% of loans originated between 2003 and 2007, and shows that all other things being equal, a typical prime ARM
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