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We provide evidence that lenders differ in their ex post incentives to internalize price-default externalities associated with the liquidation of collateralized debt. Using the mortgage market as a laboratory, we conjecture that lenders with a large share of outstanding mortgages on their...
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The economic destruction of the foreclosure crisis and the Great Recession included not only the 4.5 million families … foreclosure crisis and Great Recession …
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I develop an equilibrium model of housing and default to jointly analyze the effects of bankruptcy and foreclosure … debt. I show that the interaction between foreclosure and bankruptcy decisions is crucial for explaining the observed cross … bankruptcy rates but increased foreclosure rates, and that the Home Affordable Refinance Program reduced foreclosures during the …
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The goal of this paper is to show that household-level financial distress (FD) varies greatly, meaning there is unequal exposure to macroeconomic risk, and that FD can increase macroeconomic vulnerability. To do this, we first establish three facts: (i) regions in the U.S. vary significantly in...
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