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- W2007680047 abstract "We investigate whether homeowners respond strategically to news of mortgage modification programs by defaulting on their mortgages. We exploit plausibly exogenous variation in modification policy induced by U.S. state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers with mortgages throughout the country. Using a difference-in-difference framework, we find that Countrywide's relative delinquency rate increased more than ten percent per month immediately after the program's announcement. The borrowers whose estimated default rates increased the most in response to the program were those who appear to have been the least likely to default otherwise, including those with substantial liquidity available through credit cards and relatively low combined loan-to-value ratios. These results suggest that strategic behavior of borrowers should be an important consideration in designing mortgage modification programs." @default.
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- W2007680047 date "2011-01-01" @default.
- W2007680047 modified "2023-09-29" @default.
- W2007680047 title "Mortgage Modification and Strategic Behavior: Evidence from a Legal Settlement with Countrywide" @default.
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- W2007680047 doi "https://doi.org/10.2139/ssrn.1836451" @default.
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