New York Fed research paper: "Understanding the Securitization of Subprime Mortgage Credit" [PDF] (scribd.com)

For those of you who are interested in learning what REALLY went on with the subprime mortgage crisis, the NY Fed has provided the best description yet. It's long (82 pages), but not too technical. You don't need to be familiar with securitization or the mortgage-backed securities markets to understand it.

Abstract: "In this paper, we provide an overview of the subprime mortgage securitization process and the seven key informational frictions that arise. We discuss the ways that market participants work to minimize these frictions and speculate on how this process broke down. We continue with a complete picture of the subprime borrower and the subprime loan, discussing both predatory borrowing and predatory lending. We present the key structural features of a typical subprime securitization, document how rating agencies assign credit ratings to mortgage-backed securities, and outline how these agencies monitor the performance of mortgage pools over time. Throughout the paper, we draw upon the example of a mortgage pool securitized by New Century Financial during 2006."