Mortgage Relief: Who CARES?

37 Pages Posted: 10 Jul 2020

See all articles by Mariya Letdin

Mariya Letdin

Florida State University

Meagan McCollum

University of Tulsa - Collins College of Business

Date Written: July 6, 2020


The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides mortgage forbearance relief to qualifying borrowers, whose loans are placed in a government backed mortgage pool. We analyze the effects of being ineligible for the program by examining the aftermath of the same requirement in the Home Affordable Refinance Program (HARP). Using a comparable sample of borrowers with Freddie Mac loans and privately securitized loans (Bbx) we compare loan performance and quantify potential wealth, consumption, and credit consequences for prime borrowers whose loans were placed in private securitization pools and who were thus ineligible for a government relief program. We show that restricting modification benefits to include only borrowers in federally backed mortgage pools results in significant loss in wealth (through reduced prepayment and increased default) for those otherwise similar borrowers whose loans are placed outside of GSE pools. The greatest detriment is documented in CBSAs with the largest housing price declines.

Keywords: Mortgage Default, Mortgage Relief Policy, HARP, CARES Act

JEL Classification: G51, G21

Suggested Citation

Letdin, Mariya and McCollum, Meagan, Mortgage Relief: Who CARES? (July 6, 2020). Available at SSRN: or

Mariya Letdin (Contact Author)

Florida State University ( email )

College of Business
Tallahassee, FL 32306
United States

Meagan McCollum

University of Tulsa - Collins College of Business ( email )

600 South College
Tulsa, OK 74104
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics