by Calculated Risk on 3/23/2007 12:31:00 PM

From the NYTimes: The Subprime Loan Machine. This story describes the rise of automated underwriting; both the benefits and the pitfalls.

“Automated underwriting put the credit score on such a pedestal that it obscured the other important things, like is the income actually there,” said Professor Retsinas of Harvard. “Before there was A.U., down payment mattered a lot. Where we’ve crossed the line in recent years is to say, we don’t need down payment.”

This article is very good, but Tanta notes that it doesn't mention Nicolas Retsinas previously "served as Assistant Secretary for Housing-Federal Housing Commissioner at the United States Department of Housing and Urban Development, and as Director of the Office of Thrift Supervision."

The following two articles look at the impact of the housing bust on communities (hat tip: Wayne):

From the NY Times: Foreclosures Force Suburbs to Fight Blight

“It’s a tragedy and it’s just beginning,” Mayor Judith H. Rawson of Shaker Heights, a mostly affluent suburb, said of the evictions and vacancies, a problem fueled by a rapid increase in high-interest, subprime loans.

“All those shaky loans are out there, and the foreclosures are coming,” Ms. Rawson said. “Managing the damage to our communities will take years.”

From the Charlotte Observer: Failed mortgages fly under the radar

An Observer analysis of county records found 35 Mecklenburg developments of low-priced homes built in the past decade with foreclosure rates of 20 percent or higher. Dozens of residents say the concentrations have damaged their communities. Prices fell. Renters moved in. Crime sometimes rose.