Why Don ’ t Lenders Renegotiate More Home Mortgages ? Redefaults , Self-Cures , and Securitization

@inproceedings{Adelino2009WhyD,
  title={Why Don ’ t Lenders Renegotiate More Home Mortgages ? Redefaults , Self-Cures , and Securitization},
  author={Manuel Adelino and Kristopher S. Gerardi and Paul S. Willen},
  year={2009}
}
We document the fact that servicers have been reluctant to renegotiate mortgages since the foreclosure crisis started in 2007, having performed payment-reducing modifications on only about 3 percent of seriously delinquent loans. We show that this reluctance does not result from securitization: servicers renegotiate similarly small fractions of loans that they hold in their portfolios. Our results are robust to different definitions of renegotiation, including the one most likely to be affected… CONTINUE READING
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