Understanding Securitization Role in Subprime Lending: Evidence from Countrywide Financial (U.S.)

Abstract

This paper provides an insight into the key informational frictions that arise in the process of securitization. Study has been done to understand the reasons of Liquidity crisis and examining the reasons behind subprime lending. We continue with a complete picture of the subprime borrower and the subprime loan along with the concept of predatory borrowing and predatory lending. We have draw the example of a mortgage pool securitized by Countrywide Financial from 2005–2008 to understand the role of securitization in global financial crisis.