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Working Paper
End of the Line: Behavior of HELOC Borrowers Facing Payment Changes
An important question in the household finance literature is whether a change in required debt payments affects borrower behavior. One challenge in this literature has been identifying whether higher default rates observed after an increase in debt payments stem from the inability of borrowers to pay the higher amount, or the attrition of better borrowers in advance of the payment change. A related question is whether the higher default rate is a result of specific features of the debt product, or the type of borrower who chooses the product. We address both of these questions as they relate ...