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The role of the economic environment on mortgage defaults during the Great Recession


  • Camilo Sarmiento


This article shows that the rise in unemployment played a very significant factor in the rise of mortgage delinquencies during the Great Recession. Estimation results, moreover, show that changes in the Unemployment Rate (UR; from loan origination) as opposed to the level of the UR explain mortgage default. Mortgage default is found to be significantly less responsive to declines than to increases in the UR.

Suggested Citation

  • Camilo Sarmiento, 2012. "The role of the economic environment on mortgage defaults during the Great Recession," Applied Financial Economics, Taylor & Francis Journals, vol. 22(3), pages 243-250, February.
  • Handle: RePEc:taf:apfiec:v:22:y:2012:i:3:p:243-250 DOI: 10.1080/09603107.2011.613753

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    Cited by:

    1. Andrés Alegría & Jorge Bravo, 2015. "Análisis de Riesgo de los Deudores Hipotecarios en Chile," Working Papers Central Bank of Chile 766, Central Bank of Chile.

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