Abstract
Why do homeowners default on mortgages? This paper studies the question using a survey specifically designed for the purpose, with a sample drawn from (and matched to) very rich administrative data. I find that a wide variety of typically-unobserved liquidity shocks together trigger nearly all defaults, so “strategic” default with no liquidity trigger is much less common than it usually appears. Conversely, even in this uniquely rich data I find that many foreclosures are not triggered by negative home equity, contrary to the predictions of almost every model in the literature.
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No rights reserved. This work was authored as part of the Contributor's official duties as an Employee of the United States Government and is therefore the work of the United States Government. In accordance with 17 U.S.C. 105, no copyright protection is available for such works under U.S. law.
2023
No rights reserved. This work was authored as part of the Contributor's official duties as an Employee of the United States Government and is therefore the work of the United States Government. In accordance with 17 U.S.C. 105, no copyright protection is available for such works under U.S. law.
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