Underwriting standards declined dramatically in the middle part of the previous decade as the housing bubble approached its peak. For example, the median combined loan-to-value ratio on subprime mortgages originated for home purchases rose from 90 percent in 2003 to 100 percent in 2005 – meaning that more than one-half of borrowers who purchased homes with subprime mortgages put no money down.
The share of mortgages in which borrowers did not document fully their income or assets also increased.