Securitization and Mortgage Renegotiation: Evidence from the Great Depression

We use loan-level data from the New York City metropolitan area to examine the extent to which lenders attempted to prevent foreclosures with concessionary modifications during the Great Depression. We find no principal forgiveness in the sample and only a handful of concessionary mortgage modificat...

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Bibliographic Details
Published in:The Review of financial studies 2011-06, Vol.24 (6), p.1814-1847
Main Author: Ghent, Andra C.
Format: Article
Language:English
Subjects:
Bank loans
Commercial banks
Economic crisis
Financial history
Foreclosure
Foreclosures
Great Depression
Insurance providers
Lenders
Life insurance
Loan rates
Loans
Mortgage credit
Mortgage loans
Mortgage markets
Mortgages
New York
Real estate
Real estate market
Renegotiation
Securitization
Studies
U.S.A
Urban areas
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Summary:We use loan-level data from the New York City metropolitan area to examine the extent to which lenders attempted to prevent foreclosures with concessionary modifications during the Great Depression. We find no principal forgiveness in the sample and only a handful of concessionary mortgage modifications of other types. Far more mortgages terminated through foreclosure than received any sort of concessionary modification. The results indicate that there are significant impediments to renegotiation of residential mortgages beyond securitization. As such, less renegotiation seems unlikely to be a major cost of securitization of residential mortgages.
ISSN:0893-9454
1465-7368
DOI:10.1093/rfs/hhr017