Recourse And Strategic Mortgage Defaults Evidence From Changes In Housing Market Laws PDF Download
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| 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 | : Alin Marius Andrieş |
| Publisher | : |
| Total Pages | : |
| Release | : 2021 |
| Genre | : |
| ISBN | : |
Download Recourse and (strategic) Mortgage Defaults: Evidence from Changes in Housing Market Laws Book in PDF, ePub and Kindle
| 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 | : Wenli Li |
| Publisher | : |
| Total Pages | : |
| Release | : 2015 |
| Genre | : |
| ISBN | : |
Download Recourse and Residential Mortgages Book in PDF, ePub and Kindle
| 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.
| Author | : |
| Publisher | : DIANE Publishing |
| Total Pages | : 37 |
| Release | : |
| Genre | : |
| ISBN | : 1437985335 |
Download Rise in Mortgage Defaults Book in PDF, ePub and Kindle
| 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 | : Juan Carlos Hatchondo |
| Publisher | : |
| Total Pages | : 54 |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
Download Mortgage Defaults and Prudential Regulations in a Standard Incomplete Markets Model Book in PDF, ePub and Kindle
A model of mortgage defaults is built into the standard incomplete markets model. Households face income and house-price shocks and purchase houses using long-term mortgages. Interest rates on mortgages are determined in equilibrium according to the risk of default. The model accounts for the observed patterns of housing consumption, mortgage borrowing, and defaults. Default-prevention policies are evaluated. The mortgage default rate, housing demand, households' ability to self-insure, and welfare are hump-shaped in the degree of recourse (the level of defaulters' wealth that can be garnished). Two forces affect default. More recourse implies that the punishment for default is harsher; this reduces the default rate. But more recourse also decreases the interest rates offered; this increases borrowing and the default rate. Introducing loan-to-value (LTV) limits for new mortgages contains borrowing, lowering 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. The behavior of economies with alternative prudential regulations is evaluated during a boom-bust episode in aggregate house prices. In the economy with both recourse mortgages and LTV limits, the mortgage default rate is less sensitive to fluctuations in aggregate house prices.
| Author | : John Krainer |
| Publisher | : DIANE Publishing |
| Total Pages | : 45 |
| Release | : 2010-10 |
| Genre | : Law |
| ISBN | : 143793384X |
Download Mortgage Default and Mortgage Valuation Book in PDF, ePub and Kindle
The authors develop an equilibrium valuation model that incorporates optimal default to show how mortgage yields and lender recovery rates on defaulted mortgages depend on initial loan-to-value (LTV) ratios. The analysis treats both the frictionless case and the case in which borrowers and lenders incur deadweight costs upon default. The model is calibrated using data on California mortgages. Given reasonable parameter values, the model does a surprisingly good job fitting the risk premium in the data for high LTV mortgages. Thus, from an ex ante perspective, the authors do not find strong evidence of systematic underpricing of default risk in the run-up to the housing market crisis. Charts and tables.
| 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.
