Complex mortgages became a popular borrowing instrument during the bullish housing market of the early 2000s but … mortgages) enable households to postpone loan repayment compared to traditional mortgages and hence relax borrowing constraints … contract terms. We document that complex mortgages were chosen by prime borrowers with high income levels seeking to purchase …

We study the effects of securitization on renegotiation of distressed residential mortgages over the current financial … 36% more likely to be renegotiated than comparable securitized mortgages (4.2 to 5.7% in absolute terms). Also …

both speculators and their lenders use interest-only mortgages (IOs) rather than traditional mortgages when there is a …, consistent with the reason why lenders prefer IOs, these mortgages are more likely to be repaid earlier or foreclose. Combined …