4  The estimates in this paragraph are based on analysis of loan-level data from LoanPerformance by Federal Reserve Board staff. 2  BIS Review 126/2007  over the preceding three years.
Another underwriting practice in the subprime mortgage market that can add to risk is the failure to escrow taxes and insurance, which can result in payment shock to the borrower if the borrower did not fully anticipate the costs of taxes and insurances on the property.