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Impacts of the borrower's attributes, loan contract contents, and collateral characteristics on mortgage loan default

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  • Tyrone T. Lin
  • Chia-Chi Lee
  • Chun-Hung Chen

Abstract

This paper explores the factors influencing mortgage loan default and default probability by using the data from the mortgage loans of a case financial institution. The results indicate that the borrower's gender, the borrower's job position, whether the regional codes of the borrower's present residence and registered permanent residence are the same, the degree of relationship between the borrower and the guarantor, the loan-to-value ratio, the use status of collateral, and the located region of collateral are significantly positively correlated with the default probability. However, the education degree and the loan amount are significantly negatively correlated with the default probability.

Suggested Citation

  • Tyrone T. Lin & Chia-Chi Lee & Chun-Hung Chen, 2009. "Impacts of the borrower's attributes, loan contract contents, and collateral characteristics on mortgage loan default," The Service Industries Journal, Taylor & Francis Journals, vol. 31(9), pages 1385-1404, October.
    • Handle: RePEc:taf:servic:v:31:y:2009:i:9:p:1385-1404
    DOI: 10.1080/02642060903437535
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    1. Dennis R. Capozza & Dick Kazarian & Thomas A. Thomson, 1997. "Mortgage Default in Local Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 25(4), pages 631-655, December.
    2. Poh Har Neo & Seow Eng Ong, 2004. "Risk Sharing in Mortgage Loan Agreements," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 233-258.
    3. Lin, Che-Chun & Yang, Tyler T., 2005. "Curtailment as a mortgage performance indicator," Journal of Housing Economics, Elsevier, vol. 14(3), pages 294-314, September.
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    1. Sanela Pasic & Adisa Omerbegovic Arapovic, 2016. "What Triggers Loan Repayment Failure of Consumer Loans – Evidence from Bosnia and Herzegovina," Eurasian Journal of Business and Management, Eurasian Publications, vol. 4(1), pages 11-22.

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