Cover IMF Working Papers
Buy Book in Print
Resolving Residential Mortgage Distress: Time to Modify?
Author:
Mr. Jochen R. Andritzky
Search for other papers by Mr. Jochen R. Andritzky in
Current site
Google Scholar Close
Series:
IMF Working Papers
Volume/Issue:
Volume 2014: Issue 226
Language:
English
Publication Date:
17 Dec 2014
DOI:
https://doi.org/10.5089/9781484395745.001
ISBN:
9781484395745
ISSN:
1018-5941
Pages:
37
Keywords:
WP; loan modification; unsecured debt; foreclosure procedure; negative equity; central bank; Debt overhang; foreclosure; housing crisis; mortgage distress; loan restructuring; foreclosure moratorium; loan renegotiation; due diligence; foreclosure process; foreclosure alternative; mortgage workout; loan counseling; Mortgages; Loans; Housing prices; Debt relief; Debt service; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Download PDF (1.1 MB) Download Epub
In housing crises, high mortgage debt can feed a vicious circle of falling housing prices and declining consumption and incomes, leading to higher mortgage defaults and deeper recessions. In such situations, resolution policies may need to be adapted to help contain negative feedback loops while minimizing overall loan losses and moral hazard. Drawing on recent experiences from Iceland, Ireland, Spain, and the United States, this paper discusses how economic trade-offs affecting mortgage resolution differ in crises. Depending on country circumstances, the economic benefits of temporary forbearance and loan modifications for struggling households could outweigh their costs.
  • Collapse
  • Expand
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund