Lower monthly quotas effective at preventing mortgage defaults
60% of US defaults during financial crisis caused by lack of ability to pay, paper finds
The inability to pay drove 60% of mortgage defaults in the US during the great recession, a paper published by the Federal Reserve Bank of Minneapolis finds.
Who defaults on their mortgage, and why? by Lee Ohanian analyses the reasons behind defaults on mortgage payments in the US during the financial crisis. “To design mortgage modification policies that successfully stem default and allow borrowers to keep their homes, policymakers need to understand why borrowers default,” the author says.
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