Second Chances: Subprime Mortgage Modification and Re-Default

Haughwout, Andrew F.; Okah, Ebiere; Tracy, Joseph

doi:10.2139/ssrn.1527870

Cited by 62 publications

(62 citation statements)

References 14 publications

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“…18 A similar result is also found in Guiso et al (2009). 19 http://factfinder.census.gov/servlet/DTSelectedDatasetPageServlet?_lang=en&_ts=286380818796) 20 See for example discussions of strategic default in Foote et al (2008) and Haughwout et al (2010).…”

Section: Econometric Specificationmentioning

confidence: 66%

“…Initial research focused on modifications that pre-dated the government's Home Affordable Modification Program (HAMP). Haughwout et al (2010) use LoanPerformance data to estimate a competing risk model using over 53 thousand modifications of subprime loans that were originated between December 2005 and March 2009. They exclude capitalization modifications where the borrower's monthly payment can increase.…”

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confidence: 99%

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Payment Changes and Default Risk: The Impact of Refinancing on Expected Credit Losses

Tracy

Wright

2012

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.

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Section: Econometric Specificationmentioning

confidence: 66%

mentioning

confidence: 99%

Payment Changes and Default Risk: The Impact of Refinancing on Expected Credit Losses

Tracy

Wright

2012

SSRN Journal

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“…Das (2011) argues that principal reduction is most e¤ective in this regard, and Doviak and MacDonald (2011) and Haughwout et al (2010) provide supporting empirical evidence for this claim.…”

Section: Mortgage Modi…cationmentioning

confidence: 93%

Mortgage Market Design

Campbell¹

2012

119

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This paper explores the causes and consequences of cross-country variation in mortgage market structure. It draws on insights from several fields: urban economics, asset pricing, behavioral finance, financial intermediation, and macroeconomics. It discusses lessons from the credit boom, the challenges of mortgage modification in the aftermath of the boom, consumer financial protection, and alternative mortgage forms and funding models. The paper argues that the US has much to learn from mortgage finance in other countries, and specifically from the Danish implementation of the European covered bonds system.

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“…Initially, HAMP focused on reducing mortgage payments through reducing interest rates and extending loan terms. Some argued, however, that principal writedown could be a more effective intervention for underwater borrowers (Haughwout, Okah, and Tracy 2010;for an alternative view, see Adelino, Gerardi, and Willen 2014;Eberly and Krishnamurthy 2014). In June 2010, the Treasury expanded HAMP to include a "principal writedown alternative," known as HAMP-PRA.…”

Section: Evaluating the Conservatorshipsmentioning

confidence: 99%

The Rescue of Fannie Mae and Freddie Mac

Frame

Fuster

Tracy

et al. 2015

Journal of Economic Perspectives

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The imposition of federal conservatorships on September 6, 2008, at the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation—commonly known as Fannie Mae and Freddie Mac—was one of the most dramatic events of the financial crisis. These two government-sponsored enterprises play a central role in the US housing finance system, and at the start of their conservatorships held or guaranteed about $5.2 trillion of home mortgage debt. The two firms were often cited as shining examples of public-private partnerships—that is, the harnessing of private capital to advance the social goal of expanding homeownership. But in reality, the hybrid structures of Fannie Mae and Freddie Mac were destined to fail at some point, owing to their singular exposure to residential real estate and moral hazard incentives emanating from the implicit guarantee of their liabilities. We describe the financial distress experienced by the two firms, the events that led the federal government to take dramatic action in an effort to stabilize housing and financial markets, and the various resolution options available to US policymakers at the time; and we evaluate the success of the choice of conservatorship in terms of its effects on financial markets and financial stability, on mortgage supply, and on the financial position of the two firms themselves. Conservatorship achieved its key short-run goals of stabilizing mortgage markets and promoting financial stability during a period of extreme stress. However, conservatorship was intended to be a temporary fix, not a long-term solution, and more than six years later, Fannie Mae and Freddie Mac still remain in conservatorship.

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Second Chances: Subprime Mortgage Modification and Re-Default

Cited by 62 publications

References 14 publications

Payment Changes and Default Risk: The Impact of Refinancing on Expected Credit Losses

Payment Changes and Default Risk: The Impact of Refinancing on Expected Credit Losses

Mortgage Market Design

The Rescue of Fannie Mae and Freddie Mac

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