Regions where sub-prime mortgages were rare did not have housing booms or busts.
The boom and bust in housing prices has not been at all nationwide. There are great differences among States and metropolitan areas, and only a handfull of States were affected statewide, according to a recent report from the New York Fed.
The researchers found that sub-prime mortgages were prevalent in the areas with the most volatile prices and not commonly used in areas that did not participate in the boom.
Paul Krugman notes that Georgia has had more bank failures than any other State whereas Texas banks and real estate markets have not been severely affected. He says it's because Texas has strong consumer protection laws that discouraged cash-out re-fis and other risky loans that were rampant in the unregulated Georgia environment.
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