Mortgage-default research and the recent foreclosure crisis
Christopher Foote () and
No 17-13, Working Papers from Federal Reserve Bank of Boston
This paper reviews recent research on mortgage default, focusing on the relationship of this research to the recent foreclosure crisis. Research on defaults was advanced both theoretically and empirically by the time the crisis began, but economists have moved the frontier further by improving data sources, building dynamic optimizing models of default, and explicitly addressing reverse causality between rising foreclosures and falling house prices. Mortgage defaults were also a key component of early research that pointed to subprime and other privately securitized mortgages as fundamental drivers of the housing boom, although this research has been criticized recently. Going forward, improvements to data and models will allow researchers to explore the central unsolved question in this area: why mortgage default is so rare, even for households with high levels of negative equity or financial distress.
Keywords: Mortgage default; housing boom and bust; foreclosures; financial crisis (search for similar items in EconPapers)
JEL-codes: R21 R31 D12 G21 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2017-10-01, Revised 2017-10-01
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Journal Article: Mortgage-Default Research and the Recent Foreclosure Crisis (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedbwp:17-13
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