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Surprise: Subprime Mortgage Products Are Not the Problem! James R. Barth, Tong Li, Triphon Phumiwasana and Glenn Yago December 6, 2007 Publisher: Milken Institute

The second report in the four-part series on the subprime market looks at the fluid lines and inability to distinguish between subprime and prime borrowers.

While foreclosure rates differ among the 29 mortgage products available to both types of borrowers, all products are candidates for foreclosure. The data show that it is impossible to place the blame on one product or even one type of borrower. However, the existence of foreclosures and voluntary withdrawal of some products from the marketplace by the lenders prove that the product innovation process is still in play and market adjustments are happening.

For more on the subprime market series, please see:

• Despite Foreclosures, Subprime Lending Increases Homeownership
  
• Mortgage Market Turmoil: The Role of Interest-Rate Resets
• A Short History of the Subprime Mortgage Market Meltdown