. Consequently, shocks that lower house prices may trigger one of the necessary conditions for default: negative equity. A common … alternative contract attempts to prevent default by imposing full-recourse. This may cause individuals who believe they are likely … to default to rent; however, it does not prevent those who buy from experiencing negative equity. I consider a contract …

(including unsecured debt, liquid assets, and illiquid assets) play in default decisions. In sharp contrast to prior studies that … strongest predictor of default. We find that individual unemployment increases the probability of default by 5 - 13 percentage … points, ceteris paribus, compared with the sample average default rate of 3.9 percent. We also find that only 13.9 percent of …

purchase mortgages to subprime borrowers. We also document that the expansion in speculative mortgage products and underwriting …

' current debt service ratio. In doing so we address gaps in the existing literature on modelling default and stress testing … increase in new default flows. We also test for heterogeneous effects across households and find younger, low income households …

-perceived reduction in default probabilities; and suggest that liftoff provided a strong, positive signal about the future solvency of …

considerable security for banks in the case of default. Finally, our findings reveal that the shock-absorbing capacity of the …

services for their needs. Due to the large role of indirect distribution channels of mortgages by banks there are certain …

how the households' choice of risky mortgages is related to individual interest rate expectations and risk-aversion. Our …