A Risk Manager's Perspective on Causes of the Subprime Mortgage Crisis

Incisive analysis of the interworkings of human behavior and risk management by David Rowe of Kamakura Corp. in his article Dangerous Adaptation: The Evolution of Risk. It's a quick read on the adaptability of the human wallet, er, mind. - David

The Risk of Further Declines in Home Prices: Someone Knows the Answer

What's the risk of more wholesale price declines in real estate?  Low, and getting lower. 

So whose prediction is that?  It is the prediction someone who really needs to know the answer: major providers of private mortgage insurance (PMI).  These are the folks who know how to measure mortgage default probabilities much better than AIG knew how to predict MBS (mortgage-backed securities) default probabilities, and here's what they think: Risk wanes for real estate price declines | Inman News - David

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Side Deals in Real Estate Sales? Bad Idea

Buyers and sellers will sometimes be offered or asked to accept undocumented side deals in real estate transactions.  This is a great way to introduce surprises, disappointment, risk, and potential legal problems into an otherwise clean transaction.  Sound like a good idea?  No, and that's the right answer if you're asked to do so. 

Side agreement forced on you? Look for a new property, a new Realtor, or both. - David

More info: Home-sale side agreement has pitfalls - latimes.com

It's Not About Ben! - The Housing Meltdown Explained (by David White)

Fed Chariman Ben Bernanke recently inferred that the Fed's policy of low interest rates was not a major factor in the mortgage meltdown. That's right and wrong, and he's taking some heat for it. Let's sort it out:

He's RIGHT because low rates targeted by the Fed and endorsed by the originators (lenders) and backers (Freddy, Fannie, AIG, etc.) of those mortgages certainly improved the affordability of housing and homebuilding, a strong positive, contributing to the housing boom and a great deal of desirable new construction. Prudent capital investment by the private sector is a good thing, and it is encouraged by low costs of borrowing.