Q: Do you think we will avoid another mortgage crisis now because subprime lending isn’t so high like it was before the last financial crisis? Chad, Mendham, NJ A: Chad, there were many factors that contributed to the mortgage crisis of the last decade, one of the biggest, of course, being the creation of questionable mortgage backed securities, where one security instrument was divided into pieces and then sold separately to investors. But now a decade after it began, the Great Recession is now commonly blamed on a subprime mortgage crisis. The prevailing subprime crisis narrative is that the supply of credit to low-income households fueled increasing house prices, and was responsible for the crash. Narratives can be very persuasive […]
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