This article reviews the surge in research on mortgage default inspired by the recent
foreclosure crisis. Economists already understood a great deal about default, both …

Originally written for a conference of the Federal Reserve, Gary Gorton's" The Panic of 2007"
garnered enormous attention and is considered by many to be the most convincing take on …

As applied to the behavior of homeowners with mortgages, option theory predicts that
mortgage prepayment or default will be exercised if the call or put option is 'in the money'by …

This paper uses new data from the PSID to quantify the relative importance of negative
equity versus ability to pay, in driving mortgage defaults between 2009 and 2013. These …

How did problems with subprime mortgages result in a systemic crisis, a panic? The
ongoing Panic of 2007 is due to a loss of information about the location and size of risks of …

Understanding the ongoing credit crisis or panic requires understanding the designs of a
number of interlinked securities, special purpose vehicles, and derivatives, all related to …

Applying a permanent income model with exogenous liquidity constraints and mortgage
behavior, household refinancing when mortgage interest rates are historically high and …

ABSTRACT “Limits of Arbitrage” theories hypothesize that the marginal investor in a
particular asset market is a specialized arbitrageur rather than a diversified representative …

The consumption function for the US economy is estimated with real estate and financial
wealth for quarterly data for 1952: 1–2001: 4. An additional dollar of real estate wealth …

This paper provides the first rigorous assessment of the homeownership experiences of
subprime borrowers. We consider homeowners who used subprime mortgages to buy their …