with search in the housing market and defaultable long-term mortgages. In equilibrium, both sellers' asking prices and time …-to-sell increase with the relative size of their outstanding mortgages. In turn, the liquidity of the housing market associated with … time-to-sell determines the mortgage standards of competitive lenders, measured by the maximum loan-to-value (LTV) ratio …

risk in the mortgage market raises the default rate and spreads to the rest of the economy, creating a recession. In our …. This policy is successful in stabilizing the mortgage market and makes all agents better off. …This paper models the housing sector, mortgages and endogenous default in a DSGE setting with nominal and real …