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Securitization and Mortgage Renegotiation: Evidence from the Great Depression

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  • Andra C. Ghent

Abstract

We use loan-level data from the New York City metropolitan area to examine the extent to which lenders attempted to prevent foreclosures with concessionary modifications during the Great Depression. We find no principal forgiveness in the sample and only a handful of concessionary mortgage modifications of other types. Far more mortgages terminated through foreclosure than received any sort of concessionary modification. The results indicate that there are significant impediments to renegotiation of residential mortgages beyond securitization. As such, less renegotiation seems unlikely to be a major cost of securitization of residential mortgages. The Author 2011. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.

Suggested Citation

  • Andra C. Ghent, 2011. "Securitization and Mortgage Renegotiation: Evidence from the Great Depression," Review of Financial Studies, Society for Financial Studies, vol. 24(6), pages 1814-1847.
  • Handle: RePEc:oup:rfinst:v:24:y:2011:i:6:p:1814-1847
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    File URL: http://hdl.handle.net/10.1093/rfs/hhr017
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    Cited by:

    1. Giovanni Favara & Mariassunta Giannetti, 2017. "Forced Asset Sales and the Concentration of Outstanding Debt: Evidence from the Mortgage Market," Journal of Finance, American Finance Association, vol. 72(3), pages 1081-1118, June.
    2. Tom Emmerling & Crocker Liu & Yildiray Yildirim, 2017. "The Hybrid Nature of Real Estate Trusts," ERES eres2017_370, European Real Estate Society (ERES).
    3. 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.
    4. repec:fip:fedreq:00044 is not listed on IDEAS
    5. Aaronson, Daniel & Hartley, Daniel & Mazumder, Bhashkar, 2017. "The Effects of the 1930s HOLC “Redlining” Maps," Working Paper Series WP-2017-12, Federal Reserve Bank of Chicago.
    6. repec:eee:finsta:v:33:y:2017:i:c:p:1-22 is not listed on IDEAS
    7. Sebastián Fleitas & Price Fishback & Kenneth Snowden, 2015. "Forbearance by Contract: How Building and Loans Mitigated the Mortgage Crisis of the 1930s," NBER Working Papers 21786, National Bureau of Economic Research, Inc.
    8. Giovanni Favara, 2013. "Mortgage Market Concentration, Foreclosures and House Prices," 2013 Meeting Papers 643, Society for Economic Dynamics.

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