At the time of this writing (early April, 2007), the 60-day delinquency rate in the sub-prime segment of the home mortgage market of the US was 15% and rising. Sub-prime loans are the riskiest, associated with some combination of poor credit history, little or no down payment, and inadequate documentation of income and assets. Had there been no mandatory disclosures in this market, in my opinion the delinquency rate today would be 15% and rising. For one thing, many of the subprime borrowers who are now in trouble knew exactly what they were doing and could not have been persuaded by any disclosures to do anything differently. Such borrowers include many who took 100% loans in order to buy the most expensive house possible in an expectation of continued price appreciation. They went for a quick score and lost. With prices no longer appreciating, these borrowers have negative equity and little incentive to continue making the payments. There is another group of sub-prime borrowers, also heavily represented in the default statistics, who did not fully understand what they were doing and might have been helped by mandatory disclosures. But they weren’t because the existing disclosures were hopelessly inadequate. This group took on adjustable rate mortgages (ARMs) with high-risk features. These ARMs include 2/28s with large margins, where the initial rate is fixed for 2 years and then reset to equal the current value of an index plus a margin.