We propose a parsimonious model with adverse selection where delinquency, renegotiation, and bankruptcy all occur in … equilibrium as a result of a simple screening mechanism. A borrower has private information about her cost of bankruptcy, and a …, and thus become delinquent. The lender renegotiates with some delinquent borrowers. In the absence of renegotiation …

We ask whether the correlation between mortgage leverage and default is due to moral hazard (the causal effect of … leverage must weigh default-prevention against market distortions due to adverse selection …

about the role of liquidity, equity, income levels, and payment burden as determinants of mortgage default using a unique … may have been a more important predictor of mortgage default than equity, income level, or payment burden. Borrowers with … lead to lower default rates. A policy or pilot program could test the impact of this trade-off and, if impactful and cost …

We study whether a default option attached to non-recourse mortgages improves borrowers' surplus from mortgage … default rates. We find that the interest rate of non-recourse mortgage decreases with the borrower's surplus from home …

(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 …

Strategic default behavior suggests that the default process is not only a matter of inability to pay. Economic costs … and benefits affect the incidence and timing of defaults. As with prior research, the authors find that people default … strategically as their home value falls below the mortgage value (exercise the put option to default on their first mortgage). While …