Recourse And Residential Mortgage Default PDF Download
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Author | : Andra C. Ghent |
Publisher | : |
Total Pages | : 0 |
Release | : 2011 |
Genre | : |
ISBN | : |
Download Recourse and Residential Mortgage Default Book in PDF, ePub and Kindle
We quantify the effect of recourse on default. We find that recourse affects default through lowering the borrower's sensitivity to negative equity. At the mean value of the default option for defaulted loans, borrowers are 30% more likely to default in non-recourse states; for homes appraised at $500,000 to $750,000, borrowers are twice as likely to default in non-recourse states. We also find that, in states that allow deficiency judgments, defaults are more likely to occur through a lender-friendly procedure, such as a deed in lieu. We find no evidence that mortgage interest rates are lower in recourse states.
Author | : Wenli Li |
Publisher | : |
Total Pages | : |
Release | : 2015 |
Genre | : |
ISBN | : |
Download Recourse and Residential Mortgages Book in PDF, ePub and Kindle
Author | : Cem Demiroglu |
Publisher | : |
Total Pages | : |
Release | : 2014 |
Genre | : |
ISBN | : |
Download State Foreclosure Laws and the Incidence of Mortgage Default Book in PDF, ePub and Kindle
This paper examines how differences in state foreclosure laws influence the incidence of default in the residential mortgage market. Specifically, we examine how judicial review requirements, lenders' recourse rights (deficiency judgments), and state assistance programs for distressed borrowers affect the likelihood of default during the recent US housing crisis. We argue that state foreclosure laws should have little effect on the likelihood of liquidity events (for example, shocks to borrowers' ability to make payments) and thus provide a good instrument for identifying the borrower's costs of default. We find that borrowers with negative home equity are significantly more likely to default in states with borrower-friendly foreclosure laws. Moreover, we find that foreclosure laws that are positively correlated with default are also negatively correlated with personal bankruptcy, which supports the view that foreclosure laws are instruments for costs of default and not merely proxies for unobserved income shocks. Finally, we examine how recent state and federal loan foreclosure prevention programs have affected the likelihood of default. Overall, we find a significant decline in the effect of judicial review requirements but not deficiency judgments on default after 2008.
Author | : Neil G. Waller |
Publisher | : |
Total Pages | : 21 |
Release | : 1988 |
Genre | : Default (Finance) |
ISBN | : |
Download Residential Mortgage Default Book in PDF, ePub and Kindle
Author | : Alin Marius Andries |
Publisher | : |
Total Pages | : 0 |
Release | : 2023 |
Genre | : |
ISBN | : |
Download Recourse and (Strategic) Mortgage Defaults Book in PDF, ePub and Kindle
We study the impact of changes in recourse legislation on mortgage defaults. Romania provides us with an ideal experimental setting to identify this impact. Using a large dataset of mortgage loans granted between 2003 and 2016, combined with individual income tax records, we exploit an exogenous variation in Romanian recourse policy and analyze the behavior of borrowers with mortgages issued under a creditor-friendly recourse regime after a change in policy limited lender recourse. We find robust evidence that eliminating penalties for default raises the probability of default for existing borrowers, encouraging a deterioration in payment discipline, especially for those traditionally considered least likely to default (i.e., those with higher income and lower leverage). Our findings highlight the ex-post effects of a switch from a creditor- to a debtor-friendly recourse policy. Broadly, our results point to the importance of assessing borrowers' default incentives before introducing legislation with retroactive applicability.
Author | : Juan Carlos Hatchondo |
Publisher | : |
Total Pages | : 40 |
Release | : 2015 |
Genre | : |
ISBN | : |
Download Mortgage Defaults Book in PDF, ePub and Kindle
We present a model in which households facing income and housing-price shocks use long-term mortgages to purchase houses. Interest rates on mortgages reflect the risk of default. The model accounts for observed patterns of housing consumption, mortgage borrowing, and defaults. We use the model as a laboratory to evaluate default-prevention policies. While recourse mortgages make the penalty for default harsher and thus may lower the default rate, they also lower equity and increase payments and thus may increase the default rate. Introducing loan-to-value (LTV) limits for new mortgages increases equity and thus lowers the default rate, with negligible negative effects on housing demand. The combination of recourse mortgages and LTV limits reduces the default rate while boosting housing demand. Recourse mortgages with LTV limits are also necessary to prevent large increases in the mortgage default rate after large declines in the aggregate price of housing.
Author | : Andrea C. Ghent |
Publisher | : |
Total Pages | : |
Release | : 2009 |
Genre | : |
ISBN | : |
Download Resource and Residential Mortgage Default Book in PDF, ePub and Kindle
Author | : Mr.Jochen R. Andritzky |
Publisher | : International Monetary Fund |
Total Pages | : 37 |
Release | : 2014-12-17 |
Genre | : Business & Economics |
ISBN | : 1498322344 |
Download Resolving Residential Mortgage Distress Book in PDF, ePub and Kindle
In housing crises, high mortgage debt can feed a vicious circle of falling housing prices and declining consumption and incomes, leading to higher mortgage defaults and deeper recessions. In such situations, resolution policies may need to be adapted to help contain negative feedback loops while minimizing overall loan losses and moral hazard. Drawing on recent experiences from Iceland, Ireland, Spain, and the United States, this paper discusses how economic trade-offs affecting mortgage resolution differ in crises. Depending on country circumstances, the economic benefits of temporary forbearance and loan modifications for struggling households could outweigh their costs.
Author | : Juan Carlos Hatchondo |
Publisher | : International Monetary Fund |
Total Pages | : 33 |
Release | : 2012-01-01 |
Genre | : Business & Economics |
ISBN | : 1463954778 |
Download Mortgage Defaults Book in PDF, ePub and Kindle
This paper incorporates house price risk and mortgages into a standard incomplete market (SIM) model. The model is calibrated to match U.S. data and accounts for non-targeted features of the data such as the distribution of down payments, the life-cycle profile of home ownership, and the mortgage default rate. The average coefficients that measure the agents' ability to self-insure against income shocks are similar to those of a SIM model without housing but housing increases the values of these coefficients for younger agents. The response of consumption to house price shocks is minimal. The introduction of minimum down payments or income garnishment benefits a majority of the population.
Author | : Allen C. Goodman |
Publisher | : DIANE Publishing |
Total Pages | : 45 |
Release | : 2010-10 |
Genre | : Law |
ISBN | : 1437935486 |
Download Housing Default Book in PDF, ePub and Kindle
Using a national loan level data set, the authors examine loan default as explained by local demographic characteristics and state level legislation that regulates foreclosure procedures and predatory lending through a hierarchical linear model. They observe significant variation in the default rate across states, with lower default levels in states with higher temporal and financial costs to lenders when controlling for loan and location conditions. The results are notable given that many of the observed loans were sold to investors in national and international markets. State level legislative influences provide a foundation for discussion of national level policy that further regulates predatory lending and financial institution foreclosure activities. Charts and tables.