No Job, No Money, No Refi: Frictions to Refinancing in a Recession

• 成果类型: Article
• 署名作者: Defusco, Anthony A.; Mondragon, John
• 署名单位: Northwestern University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12952
• 发表日期: 2020
• 页码: 2327-2376
• 关键词: MORTGAGE MODIFICATION; monetary-policy; constraints; Heterogeneity; consumption; channel

摘要

We study how employment documentation requirements and out-of-pocket closing costs constrain mortgage refinancing. These frictions, which bind most severely during recessions, may significantly inhibit monetary policy pass-through. To study their effects on refinancing, we exploit a Federal Housing Administration policy change that excluded unemployed borrowers from refinancing and increased others' out-of-pocket costs substantially. These changes dramatically reduced refinancing rates, particularly among the likely unemployed and those facing new out-of-pocket costs. Our results imply that unemployed and liquidity-constrained borrowers have a high latent demand for refinancing. Cyclical variation in these factors may therefore affect both the aggregate and distributional consequences of monetary policy.