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Mortgage modifications in Ireland: a recent history

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  • McCann, Fergal

    (Central Bank of Ireland)

Abstract

Mortgage modification has played a central role in the policy response to the mortgage arrears crisis in Ireland. In this Letter I use Central Bank loan level data to provide a time line of the recent history of modification issuance in Ireland, highlighting the rapid switch from modifications of a short-term to those of a more long-term, sustainable nature since 2013. I then show in an empirical model that the probability of non-payment increases substantially for modified mortgages with a previous default history, as it does for those with higher loan-to-value ratios, those with higher interest rates, those outside Dublin and those issued short-term, temporary arrangements.

Suggested Citation

  • McCann, Fergal, 2017. "Mortgage modifications in Ireland: a recent history," Economic Letters 16/EL/17, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:16/el/17
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    File URL: https://www.centralbank.ie/docs/default-source/publications/economic-letters/vol-2017-no-16---mortgage-modification-in-ireland-a-recent-history-(mccann).pdf?sfvrsn=7
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    References listed on IDEAS

    as
    1. Agarwal, Sumit & Amromin, Gene & Ben-David, Itzhak & Chomsisengphet, Souphala & Evanoff, Douglas D., 2011. "The role of securitization in mortgage renegotiation," Journal of Financial Economics, Elsevier, vol. 102(3), pages 559-578.
    2. Sumit Agarwal & Gene Amromin & Itzhak Ben-David & Souphala Chomsisengphet & Tomasz Piskorski & Amit Seru, 2017. "Policy Intervention in Debt Renegotiation: Evidence from the Home Affordable Modification Program," Journal of Political Economy, University of Chicago Press, vol. 125(3), pages 654-712.
    3. Adelino, Manuel & Gerardi, Kristopher & Willen, Paul S., 2013. "Why don't Lenders renegotiate more home mortgages? Redefaults, self-cures and securitization," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 835-853.
    4. Christopher Mayer & Edward Morrison & Tomasz Piskorski & Arpit Gupta, 2014. "Mortgage Modification and Strategic Behavior: Evidence from a Legal Settlement with Countrywide," American Economic Review, American Economic Association, vol. 104(9), pages 2830-2857, September.
    5. Danne, Christian & McGuinness, Anne, 2016. "Mortgage modifications and loan performance," Research Technical Papers 05/RT/16, Central Bank of Ireland.
    Full references (including those not matched with items on IDEAS)

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