Refinance and Mortgage Default: A Regression Discontinuity Analysis of Harp's Impact on Default Rates
Posted: 27 Nov 2017 Last revised: 18 Mar 2018
Date Written: November 20, 2017
This paper examines the impact of refinancing on mortgage defaults based on an empirical investigation of the Home Affordable Refinance Program (HARP). We study a unique dataset from Freddie Mac which includes loans funded right before and after the HARP eligibility cutoff date, an exogenous event. Using a Fuzzy Regression Discontinuity Design method, we show that receiving a HARP refinance materially decreases the expected monthly default rate by about 48-62 percent using different bandwidth specifications.
Keywords: HARP; Refinance; Mortgage default; Fuzzy RDD
JEL Classification: E65; G21; G28; R28
Suggested Citation: Suggested Citation