Collateral Damage: Refinancing Constraints and Regional Recessions

Journal of Money, Credit and Banking, Vol. 29, No. 4, Part 1, November 1997

Posted: 18 Jul 1997

See all articles by Andrew Caplin

Andrew Caplin

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Charles Freeman

Leonard N. Stern School of Business - Department of Economics

Joseph S. Tracy

National Bureau of Economic Research (NBER); Federal Reserve Bank of Dallas

Abstract

In the current structure of the U.S. residential mortgage market, a decrease in property values may make it very difficult for homeowners to refinance their mortgages to take advantage of declining interest rates. In this paper, we show that this form of collateral constraint has greatly reduced refinancing in states with depressed property markets. We outline the interaction between regional recessions and refinancing constraints.

JEL Classification: E52, E58

Suggested Citation

Caplin, Andrew and Freeman, Charles and Tracy, Joseph, Collateral Damage: Refinancing Constraints and Regional Recessions. Journal of Money, Credit and Banking, Vol. 29, No. 4, Part 1, November 1997, Available at SSRN: https://ssrn.com/abstract=37809

Andrew Caplin (Contact Author)

New York University (NYU) - Department of Economics ( email )

269 Mercer Street, 7th Floor
New York, NY 10011
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Charles Freeman

Leonard N. Stern School of Business - Department of Economics

269 Mercer Street
New York, NY 10003
United States

Joseph Tracy

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Federal Reserve Bank of Dallas ( email )

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
3,547
PlumX Metrics