There are two prevailing theories of borrower default: strategic default—when debt is too high relative to the value of the house—and adverse life events—such that the monthly payment is too high relative to available resources. It has been challenging to test between these theories in...

There are two prevailing theories of borrower default: strategic default--when debt is too high relative to the value of the house--and adverse life events--such that the monthly payment is too high relative to available resources. It has been challenging to test between these theories in part...

Approximately two thirds of American families own a home and for most homeowners, their house is also their most important source of wealth. Homeowners are currently sitting on historically high levels of home equity and the potential withdrawal of this home equity has important implications for...

COVID-19 devastated the US labor market threatening homeowners’ ability to stay current on their mortgage. During the Great Recession, payment relief was more difficult to come by whereas the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided most impacted homeowners with up...

How much ability does the Fed have to stimulate the economy by cutting interest rates? We argue that the presence of substantial debt in fixed-rate, prepayable mortgages means that the ability to stimulate the economy by cutting interest rates depends not just on their current level but also on...