Our second Data Talk of the 2014 series focused on Strategic Default. Featured presenters discussed their recent research. Michael Bradley and Amy Crews Cutts' research combines credit data, mortgage data, and home price data to accurately measure strategic default, then uses this information to assess the impact of neighborhood effects (foreclosures, other strategic defaulters) on this measure. Kristopher Gerardi and Paul Willen’s paper on unemployment, negative equity, and strategic default, quantifies the effects of job loss, borrower net worth, and negative equity as determinants of default. Each presentation has an accompanying publication that will be used to jumpstart the discussion.
The authors highlighted their findings, which tie together data from a variety of sources in an interesting manner to do their analysis, and conclude “strategic default” is markedly lower over the period studied than many other researchers have suggested. Bob Avery discussed both papers.
- Michael Bradley, senior vice president, Analytics, CoreLogic
- Kristopher Gerardi, financial economist and associate policy adviser, Federal Reserve Bank of Atlanta
- Paul Willen, senior economist and policy advisor, Federal Reserve Bank of Boston
- Robert Avery, project director, National Mortgage Database, Federal Housing Finance Agency (Discussant)
- Kristopher Gerardi, Kyle F. Herkenhoff, Lee Oharian, and Paul S. Willen “Unemployment, Negative Equity and Strategic Default”
- Michael Bradley, Amy Crews Cutts and Wei Liu “Strategic Mortgage Default: The Effect of Neighborhood Factors”