Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/59249
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dc.contributor.authorBubb, Ryanen_US
dc.contributor.authorKaufman, Alexen_US
dc.date.accessioned2011-09-15en_US
dc.date.accessioned2012-06-20T16:10:08Z-
dc.date.available2012-06-20T16:10:08Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/59249-
dc.description.abstractMortgage originators use credit score cutoff rules to determine how carefully to screen loan applicants. Recent research has hypothesized that these cutoff rules result from a securitization rule of thumb. Under this theory, an observed jump in defaults at the cutoff would imply that securitization led to lax screening. We argue instead that originators adopted credit score cutoff rules in response to underwriting guidelines from Fannie Mae and Freddie Mac and offer a simple model that rationalizes such an origination rule of thumb. Under this alternative theory, jumps in default are not evidence that securitization caused lax screening. We examine loan-level data and find that the evidence is inconsistent with the securitization rule-of-thumb theory but consistent with the origination rule-of-thumb theory. There are jumps in the number of loans and in their default rate at credit score cutoffs in the absence of corresponding jumps in the securitization rate. We conclude that credit score cutoff rules provide evidence that large securitizers were to some extent able to regulate originators' screening behavior.en_US
dc.language.isoengen_US
dc.publisher|aFederal Reserve Bank of Boston |cBoston, MAen_US
dc.relation.ispartofseries|aPublic policy Discussion Papers, Federal Reserve Bank of Boston |x11-6en_US
dc.subject.jelD82en_US
dc.subject.jelG01en_US
dc.subject.jelG18en_US
dc.subject.jelG21en_US
dc.subject.jelG24en_US
dc.subject.jelG28en_US
dc.subject.ddc330en_US
dc.subject.keywordfinancial crisisen_US
dc.subject.keywordmoral hazarden_US
dc.subject.keywordmortgagesen_US
dc.subject.keywordsecuritizationen_US
dc.subject.keywordcredit scoresen_US
dc.subject.stwSecuritizationen_US
dc.subject.stwMoral Hazarden_US
dc.subject.stwAsymmetrische Informationen_US
dc.subject.stwSubprime-Hypotheken_US
dc.subject.stwKreditwürdigkeiten_US
dc.subject.stwFinanzmarktkriseen_US
dc.subject.stwTheorieen_US
dc.subject.stwUSAen_US
dc.titleSecuritization and moral hazard: Evidence from credit score cutoff rulesen_US
dc.typeWorking Paperen_US
dc.identifier.ppn668371129en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US

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