Your's truly just returned from a conference he organized (with help from Susan Wachter, Marsha Courchane, Carol Reynolds, Bobbi Bernardini and Ron Donohue) on the subprime crisis the Weimer School of the Homer Hoyt Institute. I will speak in more detail about some of the issues later this week, but in the meantime, I want to put out four quick takeaways:
(1) Dennis Capozza says that defaults will not peak until around 2011.
(2) Amy Cutts says that the optimal statutory foreclosure period is something like 4 to 6 months--enough time to allow borrowers who can be saved to fix their problem, but not so long that they like the benefits of free rent.
(3) Something like 30 percent of subprime borrowers who used subprime to purchase a home put none of their own money into the transaction.
(4) Charles Leung has a nice model that shows that Central Banks are better off targeting the general price level, rather than asset prices.
More to come...
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