Research

Here you can find articles & video with the latest news that's important to real estate investors, charts to make the information clear and papers from the best minds in the industry. Click on the headlines to open the full story.

Bad Debts Rise as Bust Erodes Home Equity

Posted: August 12th, 2010


ARTICLE, NY TIMES, 08.11.2010
The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association…… Even when a lender forces a borrower to settle through legal action, it can rarely extract more than 10 cents on the dollar. “People got 90 cents for free,” Mr. Combs said. “It rewards immorality, to some extent.”

Biggest Defaulters on Mortgages Are the Rich

Posted: July 9th, 2010


ARTICLE, NY TIMES, 07.09.2010
Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

Fannie Mae gets tough on homeowners who walk away

Posted: June 24th, 2010


ARTICLE, LA TIMES, 06.24.2010
The mortgage giant plans to go to court against those who can afford to make their payments but decide it’s not worth it. It also will limit their access to future loans.

Negative Homeowner Equity and Strategic Mortgage Defaults Boost Retail Sales but Pose Another Risk to Recovery

Posted: June 18th, 2010


PAPER, MARCUS & MILLICHAP, 06.2010
Drastic reductions in home values have driven many homeowners’ equity to negative levels, and returning to break-even will, for most, require several years. Consequently, a significant portion of these upside-down homeowners will walk away from their houses, even if they have the financial means to continue making payments.

Owners Stop Paying Mortgages, and Stop Fretting

Posted: June 1st, 2010


ARTICLE, NY TIMES, 06.01.2010
Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”

A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.

Take This House and Shove It: The Emotional Drivers of Strategic Default

Posted: May 25th, 2010


PAPER, U OF A SCHOOL OF LAW, 05.14.2010
An increasingly influential view is that strategic defaulters make a rational choice to default because they have substantial negative equity. This article, which is based upon the personal accounts of over 350 individuals, argues that this depiction of strategic defaulters as rational actors is woefully incomplete. Negative equity alone does not drive many strategic defaulters’ decisions to intentionally stop paying their mortgages. Rather, their decisions to default are driven primarily by emotion

What Kind of Homeowners Choose to Default?

Posted: May 23rd, 2010


ARTICLE, LA TIMES, 05.23,2010
In fact, he says, their decisions to pull the plug “may not turn out to be economically rational.” But they walk anyway, in large part because they are at the end of their emotional rope. They’ve transitioned from feelings of anxiety and hopelessness to outright anger at their lenders, the government and/or a financial system they consider to be unfair.

60 Minutes: Walking Away (Strategic Defaults/Foreclosures)

Posted: May 10th, 2010


VIDEO, 60 MINUTES, 05.09.2010
60 Minutes looks at the growing trend of “Strategic Default,” which is when a homeowner who is financially capable of making their mortgage payments finds themselves so far under water that they simply do the math and make the decision to walk away.

Yale’s Robert Shiller Discusses Strategic Defaults

Posted: May 10th, 2010


VIDEO, 60 MINUTES, 05.09.2010
Yale Economics Professor Robert Shiller developed the widely used Case-Shiller Home Price Index. He talks with Morley Safer of “60 Minutes” about trends in real estate and whether mortgage walkaways are “going viral.”

‘Strategic’ Mortgage Defaults Jump to 12% of Total

Posted: May 4th, 2010


ARTICLE, BLOOMBERG, 04.29.2010
About 12 percent of all mortgage defaults in February were “strategic,” up from 4 percent in mid-2007, New York-based Morgan Stanley analysts led by Vishwanath Tirupattur wrote in a report today.

View The Menace of Strategic Default

Posted: April 3rd, 2010


ARTICLE, CITY JOURNAL, 04.15.2010

Subprime Mortgage Modification and Re-Default

Posted: December 3rd, 2009


PAPER, FEDERAL RESERVE BANK OF NY, 12.15.2009
This paper presents preliminary findings and is being distributed to economists
and other interested readers solely to stimulate discussion and elicit comments.

Underwater and Not Walking Away…..

Posted: October 10th, 2009


PAPER, U of A SCHOOL OF LAW, OCTOBER 2009
This article suggests that most homeowners choose not to strategically default as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure’s perceived consequences.

Moral and Social Constraints to Strategic Default on Mortgages

Posted: July 15th, 2009



PAPER, BOOTH & KELLOGG SCHOOLS OF BUSINESS, 07.15.2009
“That moral attitudes toward default do not change with the percentage of foreclosures in the area suggests that the correlation between willingness to default and percentage of foreclosures is likely to derive from a contagion effect that reduces the social stigma associated with default as defaults become more common.”

Negative Equity and Foreclosure

Posted: June 6th, 2008


PAPER, FEDERAL RESERVE BANK OF BOSTON, 06.05.2008
Christopher L. Foote and Paul S. Willen are senior economists and policy advisors