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

• 成果类型: Article
• 署名作者: Bhutta, Neil; Dokko, Jane; Shan, Hui
• 署名单位: Federal Reserve System - USA; Federal Reserve System Board of Governors; Brookings Institution
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12523
• 发表日期: 2017
• 页码: 2433-2466
• 关键词: Loss aversion; Heterogeneity; foreclosure; BEHAVIOR; options; equity; MARKET; STATES

摘要

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 underwaterfar 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.