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Collateral valuation and borrower financial constraints : evidence from the residential real estate market

Agarwal, Sumit; Ben-David, Itzhak; Yao, Wenxiong - In: Management science : journal of the Institute for … 61 (2015) 9, pp. 2220-2240

Persistent link: https://www.econbiz.de/10011372430

Do consumers choose the right credit contracts?

Agarwal, Sumit; Chomsisengphet, Souphala; Liu, Chunlin; … - 2005

A number of studies have pointed to various mistakes that consumers might make in their consumption-saving and financial decisions. We utilize a unique market experiment conducted by a large U.S. bank to assess how systematic and costly such mistakes are in practice. The bank offered consumers a...

Persistent link: https://www.econbiz.de/10010298314

Do loan officers' incentives lead to lax lending standards?

Agarwal, Sumit; Ben-David, Itzhak - 2012

We study a controlled experiment in which a bank's loan officers were incentivized based on originated loan volume to encourage prospecting for new business. While treated loan officers did attract new applications, both extensive and intensive margins of loan origination expanded ( 31% new...

Persistent link: https://www.econbiz.de/10009625941

Policy intervention in debt renegotiation : evidence from the home affordable modification program

Agarwal, Sumit; Amromin, Gene; Ben-David, Itzhak; … - 2012

We evaluate the effects of the 2009 Home Affordable Modification Program (HAMP) that provided intermediaries with sizeable financial incentives to renegotiate mortgages. HAMP increased intensity of renegotiations and prevented substantial number of foreclosures but reached just one-third of its...

Persistent link: https://www.econbiz.de/10009697769

Second liens and the holdup problem in mortgage renegotiation

Agarwal, Sumit; Amromin, Gene; Ben-David, Itzhak; … - 2014

When borrowers are delinquent, senior debtholders prefer liquidation whereas junior debtholders prefer to maintain their option value by delaying resolution or modifying the loan. In the mortgage market, a conflict of interest (“holdup”) arises when servicers of securitized senior liens are...

Persistent link: https://www.econbiz.de/10010353293

Policy intervention in debt renegotiation : evidence from the Home Affordable Modification Program

Agarwal, Sumit; Amromin, Gene; Ben-David, Itzhak; … - 2013

The main rationale for policy intervention in debt renegotiation is to enhance such activity when foreclosures are perceived to be inefficiently high. We examine the ability of the government to influence debt renegotiation by empirically evaluating the effects of the 2009 Home Affordable...

Persistent link: https://www.econbiz.de/10010212760

Banking Competition and Shrouded Attributes : Evidence from the US Mortgage Market

Agarwal, Sumit - 2020

We document that banking deregulation leads banks to offer lower initial rates on adjustable-rate mortgages to attract … borrowers, but banks also shroud these contracts by increasing back-loaded resetting rates. More shrouding can be explained by … higher proportion of naïve borrowers following the deregulation and banks shroud more where there are more naïve borrowers …

Persistent link: https://www.econbiz.de/10012854765

Collateral Valuation and Borrower Financial Constraints : Evidence from the Residential Real Estate Market

Agarwal, Sumit - 2013

Financially constrained borrowers have the incentive to influence the appraisal process in order to increase borrowing or reduce the interest rate. We document that the average valuation bias for residential refinance transactions is above 5%. The bias is larger for highly leveraged...

Persistent link: https://www.econbiz.de/10013071769

Collateral Pledge, Sunk-Cost Fallacy and Mortgage Default

Agarwal, Sumit - 2014

Individuals and firms pledge collateral to mitigate agency costs or contracting frictions in a world with asymmetric information. However, the option value theory suggests that once the mark-to-market asset valuation is below the current debt, the firms and individuals should default on their...

Persistent link: https://www.econbiz.de/10013052915

Collateral Valuation and Borrower Financial Constraints : Evidence from the Residential Real Estate Market

Agarwal, Sumit - 2014

Persistent link: https://www.econbiz.de/10013065882