The Experts below are selected from a list of 19407 Experts worldwide ranked by ideXlab platform
Amit Seru - One of the best experts on this subject based on the ideXlab platform.
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interest rate pass through mortgage rates household consumption and voluntary deleveraging
The American Economic Review, 2017Co-Authors: Marco Di Maggio, Amit Seru, Tomasz Piskorski, Amir Kermani, Benjamin J Keys, Rodney Ramcharan, Vincent W YaoAbstract:Abstract Exploiting variation in the timing of resets of adjustable-rate Mortgages (ARMs), we find that a sizable decline in mortgage payments (up to 50 percent) induces a significant increase in c...
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Advertising Expensive Mortgages
Journal of Finance, 2016Co-Authors: Umit G. Gurun, Gregor Matvos, Amit SeruAbstract:Using information on advertising and Mortgages originated by subprime lenders, we study whether advertising helped consumers find cheaper Mortgages. Lenders that advertise more within a region sell more expensive Mortgages, measured as the excess rate of a mortgage after accounting for borrower, contract, and regional characteristics. These effects are stronger for Mortgages sold to less sophisticated consumers. We exploit regional variation in mortgage advertising induced by the entry of Craigslist and other tests to demonstrate that these findings are not spurious. Analyzing advertising content reveals that initial/introductory rates are frequently advertised in a salient fashion, where reset rates are not.
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advertising expensive Mortgages
National Bureau of Economic Research, 2013Co-Authors: Umit G. Gurun, Gregor Matvos, Amit SeruAbstract:We use a unique dataset that combines information on advertising by subprime lenders and Mortgages originated by them from 2002 to 2007 to study the relationship between advertising and the nature of Mortgages obtained by consumers. We exploit the richness of our data and measure the relative expensiveness of a given mortgage as the excess rate of a mortgage after accounting for a broad set of borrower, contract, and regional characteristics associated with a given mortgage--less expensive Mortgages, all else equal, are better products from the perspective of the consumer. We find a strong positive relationship between the intensity of local advertising and the expensiveness of Mortgages extended by lenders within a given region, with the relationship strongest for advertising through newspapers, the most heavily used channel for local advertising of Mortgages. This pattern survives even after conditioning for a rich set of borrower, loan and region characteristics and exploiting differences in advertising within a given lender. Advertisers lend to consumers who, all else equal, default less, making it unlikely that our results are driven by unobservable borrower quality. We also exploit variation in mortgage advertising induced by the entry of Craigslist across different regions to demonstrate that the relation between advertising and expensiveness of Mortgages is not likely to be spurious. We corroborate that advertising is most effective when targeted at groups that might be less informed about Mortgages, such as the poor, the less educated and minorities. These findings are inconsistent with the "informative view" under which advertising allows consumers to find cheaper products, and instead support the "persuasive view" that advertising in the subprime mortgage market was used to steer consumers into expensive choices.
Manuel Adelino - One of the best experts on this subject based on the ideXlab platform.
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are lemons sold first dynamic signaling in the mortgage market
Journal of Financial Economics, 2019Co-Authors: Manuel Adelino, Kristopher S Gerardi, Barney HartmanglaserAbstract:A central result in the theory of adverse selection in asset markets is that informed sellers can signal quality and obtain higher prices by delaying trade. This paper provides some of the first evidence of a signaling mechanism through trade delays using the residential mortgage market as a laboratory. We find a strong relationship between mortgage performance and time to sale for privately securitized Mortgages. Additionally, deals made up of more seasoned Mortgages are sold at lower yields. These effects are strongest in the "Alt-A" segment of the market, where Mortgages are often sold with incomplete hard information, and in cases where the originator and the issuer of mortgage-backed securities are not affiliated.
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why don t lenders renegotiate more home Mortgages redefaults self cures and securitization
2009Co-Authors: Manuel Adelino, Kristopher S Gerardi, Paul S WillenAbstract:A leading explanation for the lack of widespread mortgage renegotiation during the financial crisis is the existence of frictions in the mortgage securitization process. This paper finds little evidence that the securitization process impeded the ability of lenders to renegotiate home Mortgages, in particular during the early part of the crisis. Using a nationally representative dataset on seriously delinquent mortgage borrowers from the first quarter of 2005 through the third quarter of 2008, we find similarly small renegotiation rates for securitized loans and loans held on banks' balance sheets. We offer an alternative theory that argues that information issues endemic to home Mortgages, where lenders negotiate with large numbers of borrowers, lead to barriers in renegotiation that are fundamentally different from those present with other types of debt. Consistent with the theory, we show that as the informational asymmetries between borrowers and lenders became less severe over the course of the crisis, renegotiation rates increased dramatically, rising from approximately 3 percent of delinquent Mortgages in early 2007 when subprime Mortgages began to default in record numbers to approximately 20 percent in late 2009 at the peak of government intervention in the mortgage market.
Michael Tucker - One of the best experts on this subject based on the ideXlab platform.
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adjustable rate and fixed rate mortgage choice a logit analysis
Journal of Real Estate Research, 2009Co-Authors: Michael TuckerAbstract:Logit analysis is used to determine if financial variables are significant in determining borrower selection between fixed-rate and adjustable-rate Mortgages. The results support the hypothesis that mortgage choice is a function of the consumer price index, Treasury bill rates, and differences in the initial interest rates offered by the competing Mortgages.
John Y Campbell - One of the best experts on this subject based on the ideXlab platform.
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structuring Mortgages for macroeconomic stability
2021Co-Authors: John Y Campbell, Joao F. Cocco, Nuno ClaraAbstract:We study mortgage design features aimed at stabilizing the macroeconomy. We model overlapping generations of mortgage borrowers and an infinitely lived risk-averse representative mortgage lender. Mortgages are priced using an equilibrium pricing kernel derived from the lender's endogenous consumption. We consider an adjustable-rate mortgage (ARM) with an option that during recessions allows borrowers to pay only interest on their loan and extend its maturity. We find that this maturity extension option stabilizes consumption growth over the business cycle, shifts defaults to expansions, and is welfare enhancing. The cyclical properties of the maturity extension ARM are attractive to a risk-averse lender so the mortgage can be provided at a relatively low cost.
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what calls to arms international evidence on interest rates and the choice of adjustable rate Mortgages
Management Science, 2017Co-Authors: Cristian Badarinza, John Y Campbell, Tarun RamadoraiAbstract:The form of the interest rate on newly issued Mortgages, namely whether they are adjustable-rate Mortgages (ARMs) or fixed-rate Mortgages (FRMs), varies considerably both across countries and over time. We attempt to uncover the sources of this variation in the "ARM share" of ARMs issued, relative to total mortgage issuance. Our emphasis is on drawing inferences about how household mortgage choice is affected by households' reactions to movements in interest rates. We complement newly assembled panel data from nine countries on the ARM share and mortgage interest rates with a panel instrumental variables approach in which we test exclusion restrictions that are implied by alternative explanations for variation in the ARM share. We uncover strong evidence in favour of current cost minimization as the proximate driver of household mortgage choice.
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a model of mortgage default
National Bureau of Economic Research, 2011Co-Authors: John Y Campbell, Joao F. CoccoAbstract:This paper solves a dynamic model of a household's decision to default on its mortgage, taking into account labor income, house price, inflation, and interest rate risk. Mortgage default is triggered by negative home equity, which results from declining house prices in a low inflation environment with large mortgage balances outstanding. Not all households with negative home equity default, however. The level of negative home equity that triggers default depends on the extent to which households are borrowing constrained. High loan-to-value ratios at mortgage origination increase the probability of negative home equity. High loan-to-income ratios also increase the probability of default by tightening borrowing constraints. Comparing mortgage types, adjustable-rate mortgage defaults occur when nominal interest rates increase and are substantially affected by idiosyncratic shocks to labor income. Fixed-rate Mortgages default when interest rates and inflation are low, and create a higher probability of a default wave with a large number of defaults. Interest-only Mortgages trade off an increased probability of negative home equity against a relaxation of borrowing constraints, but overall have the highest probability of a default wave.
Tarun Ramadorai - One of the best experts on this subject based on the ideXlab platform.
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what calls to arms international evidence on interest rates and the choice of adjustable rate Mortgages
Management Science, 2017Co-Authors: Cristian Badarinza, John Y Campbell, Tarun RamadoraiAbstract:The form of the interest rate on newly issued Mortgages, namely whether they are adjustable-rate Mortgages (ARMs) or fixed-rate Mortgages (FRMs), varies considerably both across countries and over time. We attempt to uncover the sources of this variation in the "ARM share" of ARMs issued, relative to total mortgage issuance. Our emphasis is on drawing inferences about how household mortgage choice is affected by households' reactions to movements in interest rates. We complement newly assembled panel data from nine countries on the ARM share and mortgage interest rates with a panel instrumental variables approach in which we test exclusion restrictions that are implied by alternative explanations for variation in the ARM share. We uncover strong evidence in favour of current cost minimization as the proximate driver of household mortgage choice.
