The Hidden Peril: The Role of the Condo Loan Market in the Recent Financial Crisis | Zendy

Sumit Agarwal | Zendy; Yongheng Deng | Zendy; Chenxi Luo | Zendy; Wenlan Qian | Zendy

AI Assistant Blog Pricing

Home ZAIA Blog

Open Access

The Hidden Peril: The Role of the Condo Loan Market in the Recent Financial Crisis

Author(s) -

Sumit Agarwal,

Yongheng Deng,

Chenxi Luo,

Wenlan Qian

Publication year - 2012

Publication title -

ssrn electronic journal

Language(s) - English

Resource type - Journals

ISSN - 1556-5068

DOI - 10.2139/ssrn.2171751

Subject(s) - financial crisis , financial system , business , loan , economics , finance , keynesian economics

This article studies the condominium loan market, which experienced a 15-fold increase in origination and constituted 15% of the overall residential loan originations from 2001 to 2007. Condominium loan defaults grow at a faster rate than single-family (including subprime) loan defaults. Further analysis suggests that the greater default level and growth rate in later loan cohorts are consistent with the investor channel explanation: investor borrowers default more, especially when house prices start to decline. We also show that condo defaults have triggered more defaults of the same cohort subprime mortgages at the same location.

The content you want is available to Zendy users.

Already have an account? Click here to sign in.

Having issues? You can contact us here

Accelerating Research