Details

Autor(en) / Beteiligte

• BHUTTA, NEIL
• DOKKO, JANE
• SHAN, HUI

Titel

Consumer Ruthlessness and Mortgage Default during the 2007 to 2009 Housing Bust

Ist Teil von

• The Journal of finance (New York), 2017-12, Vol.72 (6), p.2433-2466

Ort / Verlag

Cambridge: Wiley Periodicals, Inc

Erscheinungsjahr

2017

Quelle

Wiley-Blackwell Journals

Beschreibungen/Notizen

• From 2007 to 2009 U.S. house prices plunged and mortgage defaults surged. While ostensibly consistent with widespread "ruthless default," analysis of detailed mortgage and house price data indicates that borrowers do not walk away until they are deeply underwater—far deeper than traditional models predict. The evidence suggests that lender recourse is not the major driver of this result. We argue that emotional and behavioral factors play an important role in decisions to continue paying. Borrower reluctance to walk away implies that the moral hazard cost of default as a form of social insurance may be lower than suspected.