Export Event

Title

Taylor Nadauld -- The Role of the Securitization Process in the Expansion of Subprime Credit 

Location

McColl 3050 

Start

1/30/2009 2:00 PM 

End

1/30/2009 3:30 PM 

Description

We analyze the structure and attributes of subprime mortgage-backed securitization deals originated between 1997-2007. Our data set allows us to map loan-level data for over 6.5 million subprime loans to the securitization deals into which the loans were sold. We document the relationship between the structure of the securitization deal and the attributes of the underlying mortgage collateral. We find that deals comprised of loans concentrated in areas with high rates of home price appreciation receive better credit ratings on average. Deals with higher rates of home price appreciation also have a lower cost of funds. The structure of securitization deals matters because the economics of the structuring process creates incentives for deal arrangers to purchase a portfolio of loans that will provide the cheapest funding for a deal. To test this hypothesis, we identify an event which represents an external shock to the relative demand for subprime mortgages in the secondary market. We show that following the SEC’s adoption of rules reducing capital requirements on certain broker dealers, five large deal arrangers disproportionately increased their purchasing activity in ZIP codes with the highest realized rates of house price appreciation but lower average credit quality.

All Day Event

 

Recurrence

 

Workspace

Semester

 

Types

Finance Seminar 

Affiliation

The Ohio State University 

Cost

 

Additional Information

 

Additional info - Weblink

Taylor Nadauld 

Workshop?

 
Attachments
Nadauld_Job_Paper_11-25-08.pdf    
Created at 1/26/2009 3:37 PM  by Smith, Kristen 
Last modified at 1/28/2009 1:06 PM  by Smith, Kristen