Liquidity Problems and Early Payment Default among Subprime Mortgages

Optimal Stopping and Losses on Subprime Mortgages

Lender losses on mortgage loans arise from a two-stage process. In the first stage, the borrower stops making payments if and when default is optimal. The second stage is a lengthy and costly period during which the lender employs legal remedies to obtain possession and execute a sale of the collateral. This research uses data on subprime mortgage losses to explore the role of borrower and coll...

Subprime Outcomes: Risky Mortgages, Homeownership Experiences, and Foreclosures

Subprime Transitions: Lingering or Malingering in Default?

When a mortgage borrower becomes seriously delinquent (i.e., defaults), the lender initiates a time consuming and complex recovery process that may or may not result in foreclosure and eventual disposition of the real estate collateral (REO). This research studies this transition process for a unique sample of subprime mortgages that were seriously delinquent on September 30, 2001. Eight months...

Reverse Mortgages and the Liquidity of Housing Wealth

Housing wealth constitutes most of the non-pension wealth of the elderly population. This study analyzes the potential of reverse mortgages to increase the income and liquid wealth of the elderly by identifying households with relatively high levels of housing equity. Because this article looks at the whole distribution of elderly households and considers debt as well as income, it finds a larg...

Stock Liquidity and Default Risk*