This paper argues that the U.S. bankruptcy reform of 2005 played an important role in the mortgage crisis and the … bankruptcy reform caused mortgage defaults to rise, using a large dataset of individual mortgages. Our major result is that prime … and subprime mortgage default rates rose by 23% and 14%, respectively, after bankruptcy reform. We also use difference …

This paper solves a dynamic model of a household's decision to default on its mortgage, taking into account labor … income, house price, inflation, and interest rate risk. Mortgage default is triggered by negative home equity, which results … from declining house prices in a low inflation environment with large mortgage balances outstanding. Not all households …

In this paper we examine the relationship between homeowners' bankruptcy decisions and their mortgage default decisions … and the relationship between homeowners' bankruptcy decisions and lenders' decisions to foreclose. In theory, both … relationships could be either substitutes or complements. Bankruptcy and default tend to be substitutes because homeowners' budgets …

We use survey data to study American households' propensity to default when the value of their mortgage exceeds the … value of their house even if they can afford to pay their mortgage (strategic default). We find that 26% of the existing … the house. Yet, 17% of households would default, even if they can afford to pay their mortgage, when the equity shortfall …

We present a dynamic structural model of subprime adjustable-rate mortgage (ARM) borrowers making payment decisions … the model using unique data sets that contain information on borrowers' mortgage payment history, their broad balance … the delinquency rates. We find that automatic modification mortgage designs under which the monthly payment or the …

This paper examines how filing for bankruptcy under Chapter 13 helps financially distressed debtors save their homes …. We develop a model of debtors' decisions to default on their mortgages and file for bankruptcy under Chapter 13 and … evaluate the model using new data on Chapter 13 bankruptcy filers. We also examine the effect of allowing bankruptcy judges to …

the terms of mortgage contracts in bankruptcy …This paper discusses four bankruptcy-related policy issues. First, what is the economic rationale for having a … bankruptcy procedure at all and what defines an economically efficient bankruptcy procedure? Second, why did the number of U …

magnified losses in the mortgage market into large dislocations and turmoil in financial markets …