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Keywords:mortgage default 

Working Paper
Owner-Occupancy Fraud and Mortgage Performance

We use a matched credit bureau and mortgage dataset to identify occupancy fraud in residential mortgage originations, that is, borrowers who misrepresented their occupancy status as owner-occupants rather than residential real estate investors. In contrast to previous studies, our dataset allows us to show that – during the housing bubble – such fraud was broad based, appearing in the government-sponsored enterprise market and in loans held on bank portfolios as well, and increases the effective share of investors by 50 percent. We show that a key benefit of investor fraud was obtaining a ...
Working Papers , Paper 19-53

Working Paper
Do restrictions on home equity extraction contribute to lower mortgage defaults? evidence from a policy discontinuity at the Texas’ border

Texas is the only US state that limits home equity borrowing to 80 percent of home value. This paper exploits this policy discontinuity around the Texas? interstate borders and uses a multidimensional regression discontinuity design framework to find that limits on home equity borrowing in Texas lowered the likelihood of mortgage default by about 1 percentage point for all mortgages and 2-4 percentage points for nonprime mortgages. Estimated nonprime mortgage default hazards within 25 to 100 miles on either side of the Texas? border are about 15 percent smaller as one crosses into Texas.
Working Papers , Paper 1410

Working Paper
Redefault Risk in the Aftermath of the Mortgage Crisis: Why Did Modifications Improve More Than Self-Cures?

This paper examines changes in the redefault rate of mortgages that were selected for modification during 2008?2011, compared with that of similarly situated self-cured mortgages. We find a large decline in the redefault rate of both modified and self-cured mortgages over this period, but the improvement was greatest for modifications. Our analysis has identified several important factors contributing to the greater improvement for modified loans, including an increasing share of principal-reduction modifications, which appear to be more effective than other types of modification and ...
Working Papers , Paper 18-26

Working Paper
High-Skilled Services and Development in China

We document that the employment share of high-skill-intensive services is much lower in China than in countries with similar gross domestic product (GDP) per capita. We build a model of structural change with goods and low- and high-skill-intensive services to account for this observation. We find that large distortions limit the size of high-skill-intensive services in China. If they were removed, both high-skill-intensive services and GDP per capita would increase considerably. We document a strong presence of state-owned enterprises in high-skill-intensive services and argue that this ...
FRB Atlanta Working Paper , Paper 2019-21

Report
Determinants of mortgage default and consumer credit use: the effects of foreclosure laws and foreclosure delays

The mortgage default decision is part of a complex household credit management problem. We examine how factors affecting mortgage default spill over to other credit markets. As home equity turns negative, homeowners default on mortgages and HELOCs at higher rates, whereas they prioritize repaying credit cards and auto loans. Larger unused credit card limits intensify the preservation of credit cards over housing debt. Although mortgage non-recourse statutes increase default on all types of housing debt, they reduce credit card defaults. Foreclosure delays increase default rates for both ...
Staff Reports , Paper 732

Working Paper
The ins and outs of mortgage debt during the housing boom and bust

From 1999 to 2013, U.S. mortgage debt doubled and then contracted sharply. Our understanding of the factors driving this volatility in the stock of debt is hampered by a lack of data on mortgage flows. Using comprehensive, individual-level panel data on consumer liabilities, I estimate detailed mortgage inflows and outflows. During the boom, inflows from real estate investors tripled, far outpacing growth from other segments such as first-time homebuyers. During the bust, although defaults and deleveraging are popular explanations for the debt decline, a collapse in inflows has been the major ...
Finance and Economics Discussion Series , Paper 2014-91

Working Paper
Fracking and Mortgage Default

This paper ?nds that increased hydraulic fracturing, or "fracking," along the Marcellus Formation in Pennsylvania had a signi?cant, negative effect on mortgage credit risk. Controlling for potential endogeneity bias by utilizing the underlying geologic properties of the land as instrumental variables for fracking activity, we ?nd that mortgages originated before the 2007 boom in shale gas, were, post-boom, signi?cantly less likely to default in areas with greater drilling activity. The weight of evidence suggests that the greatest bene?t from fracking came from strengthening the labor ...
FRB Atlanta Working Paper , Paper 2017-4

Working Paper
The Effect of Large Investors on Asset Quality: Evidence from Subprime Mortgage Securities

The government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac?the dominant investors in subprime mortgage-backed securities before the 2008 crisis?substantively affected collateral composition in this market. Mortgages included in securities designed for the GSEs performed better than those backing other securities in the same deals, holding observable risk constant. Consistent with the transmission of private information, these effects are concentrated in low-documentation loans and for issuers that were highly dependent on the GSEs and were corporate affiliates of the mortgage ...
FRB Atlanta Working Paper , Paper 2014-4

Discussion Paper
Reverse Mortgage Retrospective: How Recent Policy Changes Affected Government-Insured Reverse Mortgage Originations and Performance

This discussion paper analyzes the outcomes of recent policy reforms to the federally insured reverse mortgage program. Prior to these reforms, more than one out of 10 older adults with a Home Equity Conversion Mortgage (HECM) was reported to be in default on the loan for failure to pay property taxes or homeowner’s insurance payments. We study the effect of two major types of policy reforms: one that restricted the amount of funds available to a borrower, and the other that introduced underwriting requirements through a financial assessment for the first time in the program’s history. ...
Consumer Finance Institute discussion papers , Paper DP 20-06

Working Paper
Redefault Risk in the Aftermath of the Mortgage Crisis: Why Did Modifications Improve More Than Self-Cures?

This paper examines changes in the redefault rate of mortgages that were selected for modification during 2008?2011, compared with that of similarly situated self-cured mortgages during the same period. We find that while the performance of both modified and self-cured loans improved dramatically over this period, the decline in the redefault rate for modified loans was substantially larger, and we attribute this difference to a few key factors. First, the modification terms regarding repayments have become increasingly more generous, including more principal reduction, resulting in greater ...
Working Papers , Paper 18-2

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