Editor: David Reiss
Brooklyn Law School

September 7, 2016

Wednesday’s Academic Roundup

By Robert Engelke

  • The nature of housing supply is critical for the functioning of the housing market, macroeconomic forecasting and policy setting. This study addresses a gap in the cross-country comparative literature by providing novel insights into the nature of new housing supply in 14 countries observed quarterly between 1970 and 2015.
  • This paper analyses how borrower liquidity constraints and home equity relate to the realized loss given default (LGD) using the quarterly U.S. residential mortgage loan-level data observed from Q2 2005 to Q1 2015. We define defaulted loans with zero-LGD as cure loans and those with non-zero LGD as non-cure loans. We find robust evidence that the borrower liquidity constraints and positive equity are explaining cure, while negative equity explains non-zero loss.
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