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Borrower attributes and the risk of default of conventional mortgages

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  • Sam Hakim
  • Mahmoud Haddad

Abstract

Using a nationwide sample of 9,000 conventional mortgages, this paper examines their default based on a set of key borrower and loan characteristics. The results of a maximum likelihood failure time model show that the default risk is higher for small mortgages with a high loan-to-value ratio and for borrowers with low income and many dependents. The results also suggest that default is negatively correlated with the age of the property and the borrower's disposable income net of monthly financial obligations. Copyright International Atlantic Economic Society 1999

Suggested Citation

  • Sam Hakim & Mahmoud Haddad, 1999. "Borrower attributes and the risk of default of conventional mortgages," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 27(2), pages 210-220, June.
    • Handle: RePEc:kap:atlecj:v:27:y:1999:i:2:p:210-220
    DOI: 10.1007/BF02300240
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    References listed on IDEAS

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    1. repec:bla:jfinan:v:44:y:1989:i:2:p:375-92 is not listed on IDEAS
    2. Jones, Lawrence D, 1993. "Deficiency Judgments and the Exercise of the Default Option in Home Mortgage Loans," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 115-138, April.
    3. Terrence M. Clauretie, 1988. "Regional Economic Diversification and Residential Mortgage Default Risk," Journal of Real Estate Research, American Real Estate Society, vol. 3(1), pages 87-97.
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    Cited by:

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    2. Bruce L. Dixon & Bruce L. Ahrendsen & Brandon R. McFadden & Diana M. Danforth & Monica Foianini & Sandra J. Hamm, 2011. "Competing risks models of Farm Service Agency seven‐year direct operating loans," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 71(1), pages 5-24, May.
    3. Andrew Carswell, 2009. "Does Housing Counseling Change Consumer Financial Behaviors? Evidence from Philadelphia," Journal of Family and Economic Issues, Springer, vol. 30(4), pages 339-356, December.

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