Residential Mortgage Default: A Review of the Literature*

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Subprime outcomes: risky mortgages, homeownership experiences, and foreclosures (2007, methodology): “Unemployment rates have been used previously in the literature as a proxy for income volatility.(23) In addition, for some households, periods of unemployment turn out to be permanent income shocks, which our portfolio-choice model tells us will affect the default decision.”
The Effect of Conforming Loan Status on Mortgage Yield Spreads: A Loan Level Analysis (2004, methodology): “Todd [2001] follows the Hendershott and Shilling methodology adding in the effect of origination costs using Freddie Mac and Federal Reserve aggregate data. Naranjo and Toevs [2002] extend the Hendershott and Shilling [1989] methodology to incorporate co-integration to correct for non-stationarity i”
Negative Equity and Foreclosure: Theory and Evidence (2008, unknown): “If transactions costs were in fact the main source of individual heterogeneity in default 23For a review of the early empirical mortgage default literature see Quercia and Stegman (1992).”