Moreover, mortgages are usually securitized.

The dubious mortgage securities are so called mortgage backed securities.

So far, the sub prime crisis has had a limited direct impact on Latin America s mortgage markets. In Mexico, the market for new low and middle income housing has grown rapidly, thanks to the creation of a market for residential mortgage securities in 2003.

America exported its toxic mortgages around the world, in the form of asset backed securities. America exported its deregulatory free market philosophy, which even its high priest, Alan Greenspan, now admits was a mistake.

So far, the sub prime crisis has had a limited direct impact on Latin America s mortgage markets.

America exported its toxic mortgages around the world, in the form of asset backed securities.

Most important, Latin America s mortgage markets and homeowners are very different from those in the US.

Nearly all mortgages have floating rates that vary with the five year loan rate set by the People s Bank. However, late last year, Everbright Bank and some others began offering fixed rate mortgages.

From 2000 through 2007, millions of American homeowners entered into mortgage contracts to finance their homes.

Nearly all mortgages have floating rates that vary with the five year loan rate set by the People s Bank.

In the United States, brokers were selling mortgages without checking whether the borrower had the means to repay.

As prices went up and recessionary pressures increased, many homeowners failed to pay their mortgages.

America managed to pass off bad mortgages worth hundreds of billions of dollars to investors (including banks) around the world.

First, household debt levels are enormous, capturing a quarter of income, with mortgage payments taking the lion s share.

Instead, easy money stimulated the economy by inducing households to refinance their mortgages, and to spend some of their capital.

High home prices are already putting great stress on many families, which are struggling to make their mortgage payments.

This implies that QE would not reach, say, Spanish households, whose mortgages are indexed to short term rates, which are already close to zero.

When the pyramid starts crumbling, government that is, taxpayers must step in to refinance the banking system, revive mortgage markets, and prevent economic collapse.

Companies using toxic materials want to anticipate which workers may be genetically sensitive to toxic exposure. Schools, motor vehicle bureaus, adoption agencies, mortgage lenders, organ transplant registries all have a stake in information about genetic predispositions.

Schools, motor vehicle bureaus, adoption agencies, mortgage lenders, organ transplant registries all have a stake in information about genetic predispositions.

After the subprime crisis erupted, mortgage and consumer debt was paid down by households either with their savings or by default. The fall in US total debt, and the narrowing of the financing gap between total debt and domestic funds, led to a significant improvement in the US current account deficit in 2008 2009, disproving US Federal Reserve Board Chairman Ben Bernanke s claim that the deficit was caused by a global saving glut.

After the subprime crisis erupted, mortgage and consumer debt was paid down by households either with their savings or by default.

Big multinational banks and mortgage lenders have moved into markets across Latin America, providing financial services that allow lenders to better manage risk. Banks are creatively tapping into migrant worker remittances, multiple family households, and other previously overlooked sources of potential income and creditworthiness.

Nationalizing Fannie and Freddie, and using them to peg the price of mortgages, would have been the cleanest and easiest way to accomplish that.

Already, 2.2 trillion of wealth has been wiped out, and about eight million households have negative equity their homes are worth less than their mortgages.

Delinquencies, defaults, and foreclosures are now spreading from sub prime to near prime and prime mortgages.

Big multinational banks and mortgage lenders have moved into markets across Latin America, providing financial services that allow lenders to better manage risk.

Losses are spreading from sub prime to near prime and prime mortgages, commercial mortgages, and unsecured consumer credit (credit cards, auto loans, student loans).

The economy grew, but mainly because American families were persuaded to take on more debt, refinancing their mortgages and spending some of the proceeds.

And then those who bought these mortgages never bothered to investigate their underlying value a spectacular abdication of managerial responsibility.

But the second line of defense is macroprudential manipulation of capital requirements, to be applied across the board or to selected market segments, such as mortgages.

Mortgage lenders seem to have believed that home buyers would not default, because rising prices would make keeping up with their payments very attractive.

When home prices stop rising, recent homebuyers may lose the enthusiasm to continue paying their mortgages and investors lose faith in mortgage backed securities.

If a homeowner stops making mortgage payments, the creditor can take the property but cannot take other assets or a fraction of wages.

Instead, they focused exclusively on US foreign debt, ignoring household debt (mortgage and consumer debt), public debt, business debt, and financial debt.

In the old days, when borrowers found it impossible to make their payments, mortgages would be restructured foreclosures were bad for both the borrower and the lender.

Insurance companies and mortgage companies ought to be willing to offer such products if they can hedge the home price risks in liquid derivative markets.

Mortgage banks kept some claims on their books, but sold most of them to investment banks as mortgage backed securities.

To be sure, financial innovation, like lending to buyers who would not normally have qualified for mortgage loans (sub prime borrowers) also played a role.

The UK, Spain, and Ireland are experiencing similar developments, with housing bubbles deflating and excessive consumer debt undercutting retail sales, thus leading to recession.

German banks grant mortgages only to a maximum of 60 of the value of a house, instead of the 100 mortgages that were frequently seen in the US and United Kingdom.

So long as official policy rates and thus long term mortgage rates remain low, such restrictions are not as binding as they otherwise would be.

But if the rate rises to 8 , mortgage interest payments rise to 24 , which, together with amortization, taxes, other debts, and necessary expenditures, may claim too much of the family budget.

Many who want to refinance their mortgages still cannot, because they are underwater (owing more on their mortgages than the underlying property is worth).

Lower interest rates worked, but not so much because they boosted investment, but because they led households to refinance their mortgages, and fueled a bubble in housing prices.