Failure to Refinance
Households that fail to refinance their mortgage when interest rates decline can lose out on substantial savings. Based on a large random sample of outstanding U.S. mortgages in December of [...]
Policy Intervention in Debt Renegotiation: Evidence from the Home Affordable Modification Program
We evaluate the effects of the 2009 Home Affordable Modification Program (HAMP) that provided intermediaries with sizeable financial incentives to renegotiate mortgages. HAMP increased intensity of renegotiations and prevented substantial [...]
Savings, Growth, and Liquidity Constraints
In the context of an overlapping-generations model, we show that liquidity constraints on households (i) raise the saving rate, (ii) strengthen the effect of growth on saving, (iii) increase the [...]
The Mounting Case for Privatizing Fannie Mae and Freddie Mac
Two of the largest government-sponsored enterprises (GSEs), the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), receive government subsidies estimated to be worth [...]
Fannie Mae, Freddie Mac, and Housing Finance
Fannie Mae and Freddie Mac are a unique part of [federal housing policy]. Though they appear to be “normal” corporations, each with shares that trade on the New York Stock [...]
Do Homeowners Know Their House Values and Mortgage Terms?
To assess whether homeowners know their house values and mortgage terms, we compare the distributions of these variables in the household-reported 2001 Survey of Consumer Finances (SCF) to the distributions [...]
Friends of Angelo: Countrywide’s Systematic and Successful Effort to Buy Influence and Block Reform
To augment its voice in the GSE-reform debate, Countrywide dispensed favors to VIPs who it believed might be worthwhile to the company. This group of borrowers included legislators, congressional staffers, [...]
Who Gets the Credit? And Does It Matter? Household vs. Firm Lending Across Countries
While the theoretical and empirical finance literature has focused almost exclusively on enterprise credit, about half of credit extended by banks to the private sector in a sample of 45 [...]
Housing Wealth Isn’t Wealth
A fall in house prices due to a change in fundamental value redistributes wealth from those long housing (for whom the fundamental value of the house they own exceeds the [...]
Real Effects of the Subprime Mortgage Crisis: Is it a Demand or a Finance Shock?
We develop a methodology to study whether and how a financial-sector crisis can spill over to the real economy, and apply it to the case of the ongoing subprime mortgage [...]