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The Effect of Principal Reduction on Household Distress : Evidence from Mortgage Cramdown

Cespedes, Jacelly C.; Parra, Carlos R.; Sialm, Clemens - National Bureau of Economic Research - 2021

Mortgage cramdown enabled bankruptcy judges to discharge the underwater portion of a mortgage during Chapter 13 … bankruptcy before the Supreme Court disallowed this practice in 1993. We exploit the random assignment of cases to judges to … quantify the ex-post effects of Chapter 13 bankruptcy over the period from 1989 to 1993. We find that a successful Chapter 13 …

Persistent link: https://www.econbiz.de/10012585384

LDC Borrowing with Default Risk

Sachs, Jeffrey - 1982

This paper presents a theoretical model to describe the effects of default risk on international lending to LDC sovereign borrowers. The threat of defaults in international lending is shown to give rise to many characteristics of the syndicated loan market: (1) quantity rationing of loans; (2)...

Persistent link: https://www.econbiz.de/10012478182

Designed to Fail : Effects of the Default Option and Information Complexity on Student Loan Repayment

Cox, James C. - 2018

We ask why so few student loan borrowers enroll in Income Driven Repayment when the majority would benefit from doing so. To do so we run an incentivized laboratory experiment using a facsimile of the government's Student Loan Exit Counseling website. We test the role information complexity,...

Persistent link: https://www.econbiz.de/10012480909

Rollover Risk and Market Freezes

Acharya, Viral V. - 2010

The crisis of 2007-09 has been characterized by a sudden freeze in the market for short-term, secured borrowing. We present a model that can explain a sudden collapse in the amount that can be borrowed against finitely-lived assets with little credit risk. The borrowing in this model takes the...

Persistent link: https://www.econbiz.de/10012462978

Rollover Risk and Credit Risk

He, Zhiguo - 2010

market liquidity and shorter debt maturity can exacerbate this externality and cause costly firm bankruptcy at higher …

Persistent link: https://www.econbiz.de/10012462997

Mortgage Default, Foreclosure, and Bankruptcy

Li, Wenli - 2009

In this paper we examine the relationship between homeowners' bankruptcy decisions and their mortgage default decisions … and the relationship between homeowners' bankruptcy decisions and lenders' decisions to foreclose. In theory, both … relationships could be either substitutes or complements. Bankruptcy and default tend to be substitutes because homeowners' budgets …

Persistent link: https://www.econbiz.de/10012463177

An Empirical Model of Subprime Mortgage Default From 2000 to 2007

Bajari, Patrick - 2008

The turmoil that started with increased defaults in the subprime mortgage market has generated instability in the financial system around the world. To better understand the root causes of this financial instability, we quantify the relative importance of various drivers behind subprime...

Persistent link: https://www.econbiz.de/10012464022

An Empirical Study of the Credit Market with Unobserved Consumer Typers

Gan, Li - 2008

This paper proposes an econometric model to identify unobserved consumer types in the credit market. Consumers choose different amounts of loan because of differences in their time or risk preferences (types). Thus, the unconditional probability of default is modeled using a mixture density...

Persistent link: https://www.econbiz.de/10012464774

Liquidity Constraints and Imperfect Information in Subprime Lending

Adams, William - 2007

We present new evidence on consumer liquidity constraints and the credit market conditions that might give rise to them. Our analysis is based on unique data from a large auto sales company that serves the subprime market. We first document the role of short-term liquidity in driving purchasing...

Persistent link: https://www.econbiz.de/10012465587

Global Business Cycles and Credit Risk

Pesaran, M. Hashem - 2005

The potential for portfolio diversification is driven broadly by two characteristics: the degree to which systematic risk factors are correlated with each other and the degree of dependence individual firms have to the different types of risk factors. Using a global vector autoregressive...

Persistent link: https://www.econbiz.de/10012467187