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Mortgage prepayment: an avenue foreclosed?

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  • Elizabeth Laderman

Abstract

When the housing boom of the past decade turned into a bust, falling house prices played a primary role in driving up delinquency and foreclosure rates. As housing values fell, distressed borrowers lost equity, which hindered their ability to escape delinquency by prepaying their mortgages by refinancing or selling their homes. Falling house prices may have especially impinged on subprime and adjustable-rate borrowers. These homeowners may have counted on being able eventually to refinance into loans with terms more affordable than those of their original mortgages.

Suggested Citation

  • Elizabeth Laderman, 2012. "Mortgage prepayment: an avenue foreclosed?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue feb13.
    • Handle: RePEc:fip:fedfel:y:2012:i:feb13:n:2012-05
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    Keywords

    Mortgage loans; Housing - Prices;

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