Mortgage Default: A Demand Choice Unknown at Purchase

Past empirical research on mortgage default has typically used purchase data to model an action that occurs months later, and variables have been specified in ratio form. Each of these has its limitations. This work goes beyond previous research by using macro- and municipal-specific data to estimate variable values at the point of the default decision. In addition, both linear and ratio specifications are employed to study the factors affecting mortgage default, given mortgage delinquency.