Adam Hale Shapiro, and Paul Willen of the Boston Fed:
This paper provides the first rigorous assessment of the homeownership experiences
of subprime borrowers… We present two main findings. First, homeownerships
that begin with a subprime purchase mortgage end up in foreclosure almost
20 percent of the time, or more than 6 times as often as experiences that
begin with prime purchase mortgages. Second, house price appreciation plays
a dominant role in generating foreclosures.