Title

Mortgage Default and Prepayment Risks among Moderate- and Low-Income Households

Document Type

Article

Language

eng

Format of Original

40 p.

Publication Date

12-2012

Publisher

Wiley

Source Publication

Real Estate Economics

Source ISSN

1080-8620

Abstract

Using a unique sample of community reinvestment loans, we study the propensity of very low-income households to terminate a mortgage and compare it to the outcomes for low-income and moderate-income households. The results indicate that, even within moderate- and low-income segments, lower or very low income is associated with higher default and lower prepayment probabilities. In addition, depending on how low the borrower's income is, classic determinants of loan termination such as credit scores, the amount of equity in the home and local labor market conditions can have different impacts on default and prepayment probabilities.

Comments

Real Estate Economics, Vol. 40, No. S1 (December 2012): S159-S198. DOI.