This paper investigates the influence of expected foreclosure duration on a borrower's future default propensity. We use the lagged actual time-varying state-level foreclosure times as proxies for borrower's expected benefit from default as the form of "free rent.'' While existing literature...

Debate exists on the relative importance of employment status and house price declines in accounting for the large number of mortgage defaults during the Great Recession.To avoid the complexities posed by potential interactions among house prices, employment status, and income, we propose the...

Many borrowers make extra principal payments on their mortgages (curtailers). Some of these curtailers subsequently go through foreclosure and lose any benefits from their curtailments. Such curtailers reveal ex-ante non-strategic preferences towards default. We contrast the default sensitivity...