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Policy Intervention in Debt Renegotiation: Evidence from the Home Affordable Modification Program

  • Sumit Agarwal
  • Gene Amromin
  • Itzhak Ben-David
  • Souphala Chomsisengphet
  • Tomasz Piskorski
  • Amit Seru

We evaluate the effects of the 2009 Home Affordable Modification Program (HAMP) that provided intermediaries with sizeable financial incentives to renegotiate mortgages. HAMP increased intensity of renegotiations and prevented substantial number of foreclosures but reached just one-third of its targeted indebted households. This shortfall was in large part due to low renegotiation intensity of a few large intermediaries and was driven by intermediary-specific factors. Exploiting regional variation in the intensity of program implementation by intermediaries suggests that the program was associated with lower rate of foreclosures, consumer debt delinquencies, house price declines, and an increase in durable spending.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18311.

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Date of creation: Aug 2012
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Handle: RePEc:nbr:nberwo:18311
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