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Helping Homeowners During the Covid-19 Pandemic: Lessons from the Great Recession

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Abstract

The Covid-19 public health crisis has sharply reduced the earnings of millions of U.S. households, following the severe curtailment of economic activity needed to contain the spread of the virus. Meanwhile, households continue to confront their ongoing financial obligations. The ability of households to manage these obligations has important consequences for the speed at which the U.S. economy can recover from the current crisis. Households that are wiped out financially in the coming months will not be in a position to strongly resume spending once the virus containment issues have passed. Moreover, a wave of missed payments on mortgages and other types of household debt could propagate through the financial system—weakening financial institutions, unnerving investors, and further prolonging the economic slump.

Suggested Citation

  • Gene Amromin & Jane K. Dokko & Karen E. Dynan, 2020. "Helping Homeowners During the Covid-19 Pandemic: Lessons from the Great Recession," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue 443, June.
    • Handle: RePEc:fip:fedhle:88287
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    References listed on IDEAS

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    1. Anthony A. Defusco & John Mondragon, 2020. "No Job, No Money, No Refi: Frictions to Refinancing in a Recession," Journal of Finance, American Finance Association, vol. 75(5), pages 2327-2376, October.
    2. Jose Maria Barrero & Nicholas Bloom & Steven J. Davis, 2020. "COVID-19 Is Also a Reallocation Shock," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(2 (Summer), pages 329-383.
    3. Marco Di Maggio & Amir Kermani & Christopher J Palmer, 2020. "How Quantitative Easing Works: Evidence on the Refinancing Channel," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(3), pages 1498-1528.
    4. Gabriel Ehrlich & Jeffrey Perry, 2015. "Do Large-Scale Refinancing Programs Reduce Mortgage Defaults? Evidence From a Regression Discontinuity Design: Working Paper 2015-06," Working Papers 50871, Congressional Budget Office.
    5. Janice Eberly & Arvind Krishnamurthy, 2014. "Efficient Credit Policies in a Housing Debt Crisis," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(2 (Fall)), pages 73-136.
    6. Eugene N. White & Kenneth Snowden & Price Fishback, 2014. "Housing and Mortgage Markets in Historical Perspective," NBER Books, National Bureau of Economic Research, Inc, number fish12-2, March.
    7. Janice Eberly & Arvind Krishnamurthy, 2014. "Efficient Credit Policies in a Housing Debt Crisis," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(2 (Fall)), pages 73-136.
    8. White, Eugene N. & Snowden, Kenneth & Fishback, Price V. (ed.), 2014. "Housing and Mortgage Markets in Historical Perspective," National Bureau of Economic Research Books, University of Chicago Press, number 9780226073842, December.
    Full references (including those not matched with items on IDEAS)

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    RePEc Biblio mentions

    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Economics of Welfare > Health Economics > Economics of Pandemics > Specific pandemics > Covid-19 > Economic policy > Household support

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    Cited by:

    1. Katharina Allinger & Elisabeth Beckmann, 2021. "Use of loan moratoria by CESEE households: who are the users and how vulnerable are they?," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q3/21, pages 7-33.
    2. Hakan Yilmazkuday, 2023. "COVID-19 and housing prices: evidence from U.S. county-level data," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 43(2), pages 241-263, August.

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    More about this item

    Keywords

    Home ownership; Covid-19; recession;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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