to control for the endogeneity of delinquency in an estimation of default and prepayment probabilities. We find strong … support for the "distressed prepayment" theory that very delinquent loans are more likely to prepay than to default and that … leads to termination of a loan through prepayment while negative equity leads to termination through default …

default are sensitive to current economic conditions and housing markets. Credit scores and loan characteristics also play …

default and consumption. Our preferred models because of their implied credit terms (interest rates), investments and default … implied behavior for human capital investment, consumption and default. We consider models with exogenously specified market …