Mortgage Defaults

 
Author/Editor: Hatchondo, Juan Carlos ; Martinez, Leonardo ; Sanchez, Juan M.
 
Publication Date: January 01, 2012
 
Electronic Access: Free Full text (PDF file size is 1,028KB).
Use the free Adobe Acrobat Reader to view this PDF file

 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: This paper incorporates house price risk and mortgages into a standard incomplete market (SIM) model. The model is calibrated to match U.S. data and accounts for non-targeted features of the data such as the distribution of down payments, the life-cycle profile of home ownership, and the mortgage default rate. The average coefficients that measure the agents’ ability to self-insure against income shocks are similar to those of a SIM model without housing but housing increases the values of these coefficients for younger agents. The response of consumption to house price shocks is minimal. The introduction of minimum down payments or income garnishment benefits a majority of the population.
 
Series: Working Paper No. 12/26
Subject(s): Bankruptcy | Economic models | Housing prices | United States

Author's Keyword(s): Mortgage | default | life cycle | down payment | garnishment
 
English
Publication Date: January 01, 2012
Format: Paper
Stock No: WPIEA2012026 Pages: 32
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
Please address any questions about this title to publications@imf.org