Why Do Homeowners Make Mortgage Curtailment Payments?

Saul Adelman, Mark Cross and David Shrider

Journal of Housing Research, 2010, vol. 19, issue 2, 195-212

Abstract: This study investigates why homeowners make mortgage curtailment payments. Using data from the Federal Reserve's Survey of Consumer Finances (1992, 1995, 1998, 2001, and 2004) to analyze household mortgage curtailments, we consider the propensity to save and relative risk and return as possible factors in the curtailment decision. We find that higher propensities to save are strongly positively correlated with the probability of curtailing the mortgage and nearly double the probability of such payments. Liquidity risk is also a factor in the curtailment decision.

Date: 2010
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DOI: 10.1080/10835547.2010.12092022

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