Mortgage Standards

While I’m a big fan of Laurie Goodman and closely followed her reports, it’s not obvious that she is right about the potentially “devastating” cost of mortgage standards.

While regulation is often burdensome, redundant, and evadable, it’s hard to believe that preventing the excesses of the 2000s isn’t worth these costs.  The alternative – letting banks set their own mortgage standards (or loosely follow the GSEs in terms of standards) – clearly failed, so most reasonable observers and probably Laurie Goodman herself would agree that some regulation is needed.

The harder and more interesting question is what this regulation should entail. More on this in a later post…


About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar.
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