The U.S. residential housing market collapse illustrates the consequences of ignoring risk while funding mortgage … divorced risk from reward. Increased mortgage capital availability, unmitigated by proper risk allocation, led to real estate … price inflation. Social trends and government policies exacerbated both the mortgage capital over-supply and the risk …

estimation always finds a small cluster of households who believe it is a good time to buy a house because house prices will rise …

We show that mortgage recourse systems, by discouraging default, magnify the impact of nominal rigidities and cause … Recession between the U.S. (mostly a non-recourse economy) and European economies with recourse mortgage systems. Recourse … differences across mortgage systems. Liquid assets play a larger role in explaining default with recourse mortgages …