研究 Trading Equity for Liquidity

For many, homeownership is a vital part of the American dream. Buying a home represents one of the largest lifetime expenditures for most homeowners, and the mortgage has generally become the financing instrument of choice. 对很多家庭来说, their mortgage will be their greatest debt and their mortgage payment will be their largest recurring monthly expense.

在这份报告中, we present a combination of new analysis and previous findings from the 12bet官方 研究所 body of housing finance research to answer important questions about the role of liquidity, 股本, 收入水平, and payment burden as determinants of mortgage default. Our analysis suggests that liquidity may have been a more important predictor of mortgage default than 股本, 收入水平, 或者支付负担.

我们发现:

• 发现1: Borrowers with little post-closing liquidity defaulted at a considerably higher rate than borrowers with at least three mortgage payment equivalents of post-closing liquidity.
• 发现2: Borrowers with little liquidity but more 股本 defaulted at considerably higher rates than borrowers with more liquidity but less 股本.
• 发现3: Default closely followed a loss of liquidity regardless of the homeowner’s 股本, 收入水平, 或者支付负担.
• 找到4: Homeowners with fewer than three mortgage payment equivalents of liquidity defaulted at higher rates regardless of 收入水平 或者支付负担.
• 发现5: Mortgage modifications that increased borrower liquidity reduced default rates, whereas modifications that increased borrower 股本 but left them underwater did not impact default rates.

综上所述, our findings suggest that a program encouraging borrowers to make a slightly smaller down payment and use the residual cash to fund an “emergency mortgage reserve” account might lead to lower default rates. A pilot program could test the impact of an emergency mortgage reserve account on default rates and, if impactful and cost-effective, the program could serve as an alternative to underwriting standards based on measuring the borrower’s static ability-to-repay using their total debt-to-income ratio at origination.