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Community Development

Why Did So Many People Make So Many Ex Post Bad Decisions? The Causes of the Foreclosure Crisis

Considering the prevailing optimism about the housing market during the recent housing boom, decisions made during that time by homeowners and financial institutions were not completely unfounded. So posits a new research paper by Atlanta Fed economists Christopher Foote and Kristopher Gerardi and Boston Fed economist Paul Willen. The paper looks at some of the factors at play prior to the foreclosure crisis, the effects on housing-related decisions, and how policymakers might respond in the future. The paper was presented at the Russell Sage and Century Foundations conference on Rethinking Finance: Perspectives on the Crisis.