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Refinance and Mortgage Default: An Empirical Analysis of the HARP's Impact on Default Rates

Jun Zhu

Federal Home Loan Mortgage Corporation (FHLMC)

December 1, 2012

This paper examines the impact of refinance on mortgage default, based on an empirical investigation of Home Affordable Refinance Program. We study a unique dataset which includes both HARP loans and HARP-eligible loans that did not refinance. Using a range of methodologies it is shown that receiving a HARP refinance materially decreases the expected default rate. After controlling for other loan characteristics and borrower selection effects, the paper finds that default rates of HARP loans decrease by about 54% from 3.31% to about 1.52% over an average 15-month performance period.

Number of Pages in PDF File: 36

Keywords: HARP, Refinance, Mortgage Default, Selection Model

JEL Classification: E65, G21, G28, R28

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Date posted: December 3, 2012 ; Last revised: December 13, 2012

Suggested Citation

Zhu, Jun, Refinance and Mortgage Default: An Empirical Analysis of the HARP's Impact on Default Rates (December 1, 2012). Available at SSRN: http://ssrn.com/abstract=2184514 or http://dx.doi.org/10.2139/ssrn.2184514

Contact Information

Jun Zhu (Contact Author)
Federal Home Loan Mortgage Corporation (FHLMC) ( email )
8200 Jones Branch Road
McLean, VA 22101
United States
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