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At the end of 2009, delinquency and default rates on individual home mortgages had reached unprecedented levels. This wave of defaults reflected a vicious combination of a deep recession, a burst housing bubble, and ill-advised financial choices by home borrowers. These effects were particularly pronounced among the least creditworthy borrowers, many of whom were first-time homeowners in the heady days of the bubble. This experience prompted calls for increased government intervention in mortgage markets. The ensuing policy discussion has centered on two key (and not mutually exclusive) approaches: (i) tighter oversight of mortgage lenders and products, and (ii) concerted efforts to educate prospective homebuyers to ensure sustainability of their financial commitments.
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