Replication data for: Mortgage Modification and Strategic Behavior: Evidence from a Legal Settlement with Countrywide

Principal Investigator(s): View help for Principal Investigator(s) Christopher Mayer; Edward Morrison; Tomasz Piskorski; Arpit Gupta

Version: View help for Version V1

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Data-Description-and-Program-Folder-Accepted-Manuscript-AER-2011-0594			12/06/2019 04:22:PM
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Project Citation:

Mayer, Christopher, Morrison, Edward, Piskorski, Tomasz, and Gupta, Arpit. Replication data for: Mortgage Modification and Strategic Behavior: Evidence from a Legal Settlement with Countrywide. Nashville, TN: American Economic Association [publisher], 2014. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-06. https://doi.org/10.3886/E116130V1

Project Description

Summary: We investigate whether homeowners respond strategically to news of mortgage modification programs. We exploit plausibly exogenous variation in modification policy induced by settlement of U.S. state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers. Using a difference-in-difference framework, we find that Countrywide's monthly delinquency rate increased more than 0.54 percentage points—a ten percent relative increase—immediately after the settlement's announcement. The estimated increase in default rates is largest among borrowers least likely to default otherwise. These results suggest that strategic behavior should be an important consideration in designing mortgage modification programs. (JEL D10, G21, G33, K00)

Scope of Project

JEL Classification:
      D14 Household Saving; Personal Finance
      G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
      K22 Business and Securities Law
      R31 Housing Supply and Markets

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V1 [2019-12-06]

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