Unemployment strongest predictor of mortgage default in the US
Unemployed people are more likely to default on a mortgage, by between 5 and 13 percentage points compared with a sample average default rate of 3.9%, according to a new research paper by the Federal Reserve Bank of Atlanta.
The finding that individual unemployment is ultimately the strongest predictor of default – presented in Unemployment, Negative Equity, and Strategic Default by Kristopher Gerardi, Kyle Herkenhoff, Lee Ohanian and Paul Willen – stands "in sharp contrast to prior studies that
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