The Subprime Decline and IT: Technology’s Role in Restoring The Market
The subprime mortgage crisis grinds on. Home foreclosures continue to shake communities across the country. Banks and securities firms, including more than 100 of the world‘s largest, are writing down assets and posting losses on investments in mortgage-backed securities – $379 billion as of May 2008.
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Recovery in the mortgage market and the secondary market for subprime investment products will depend on restoring the confidence of buyers, many of whom are still reeling from the meltdown of 2007-2008. Investors will return to the subprime mortgage market, but they will do it differently than in the past. They will want a much better understanding of the instruments they‘re buying than they had during the market's recent heyday.
Gaining that understanding will require more and better information, made available through information technology (IT) systems. This viewpoint paper discusses the role IT is likely to play in restoring investor confidence in mortgage markets.