We study the effects of securitization on renegotiation of distressed residential mortgages over the current financial crisis. Unlike prior studies, we employ unique data that directly observe lender renegotiation actions and cover more than 60% of the U.S. mortgage market. Exploiting...

The meltdown in residential real-estate prices that commenced in 2006 resulted in unprecedented mortgage delinquency rates. Until mid-2009, lenders and servicers pursued their own individual loss mitigation practices without being significantly influenced by government intervention. Using a...

The authors examine whether a borrower's choice of automobile reveals information about future loan performance. They find that loans on most luxury automobiles have a higher probability of prepayment, while loans on most economy automobiles have a lower probability of default, even when holding...

We derive the first closed-form optimal refinancing rule for mortgages: Refinance when the current mortgage interest rate falls below the original mortgage interest rate by at least (1/ψ)[φ W(-exp(-φ))], where W(.) is the principal branch of the Lambert W-function, ψ=((√(2(ρ λ)))/σ),...

In this paper we examine the incentives for lenders to steer borrowers into piggyback loan structures to circumvent regulations requiring primary mortgage insurance (PMI) for loans with loan to value ratios (LTV) above 80%. Our empirical analysis focuses on propensity score matched portfolios of...

This paper uses a dataset from one of the leading subprime lenders in America, containing detailed information on borrower and loan characteristics, finds that borrowers from the financial industry, who have higher financial literacy, are less likely to default. This effect cannot be explained...

We use a linked housing transaction dataset and a personal bankruptcy dataset to study the impact of housing credit on personal bankruptcy in Singapore. Using a difference-in-differences (DD) approach, we find that an increase in housing credit increases the monthly instalment by 560-900...

This paper studies the effects of debt insurance on the likelihood of debt renegotiation with the setting of mortgages. Mortgage insurance enables mortgage holders to potentially get compensation for the loss in mortgage investment resulting from borrower's default and subsequent liquidation. If...

This paper shows how liquidity infusions affect loan modification in the mortgage market. The design of pooling and servicing agreements leads mortgage servicers to prefer foreclosure over modification when they are liquidity constrained. Therefore, a positive liquidity shock is expected to...

This paper documents that mortgage servicers increased modification rates by approximately 8 percent for delinquent loans located in a district whose representative was a member of the Financial Services Committee in the U.S. House of Representatives during the 111th Congress. We document that...