Ratchet Effect of Cash-0ut Refis Led to Financial Meltdown
Posted on September 29th, 2009 by Mortgage Refinancing News
A new working paper suggests that the combination of rising home prices, declining interest rates, and especially the near-frictionless refinancing opportunities available to homeowners virtually guaranteed a major systemic meltdown of the financial system. The paper concludes that an independent organization similar to the National Transportation safety Board is needed to help avert a recurrence. Excerpts from Systemic Risk and the Refinancing Ratchet Effect Amir E. Khandani, Andrew W.
Filed under: Mortgage Refinancing News
