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We investigate whether homeowners respond strategically to news of mortgage modification programs. We exploit plausibly exogenous variation in modification policy induced by settlement of U.S. state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers. Using a difference-in-difference framework, we find that Countrywide's monthly delinquency rate increased more than 0.54 percentage points – ten percent relative increase – immediately after the settlement's announcement. The estimated increase in default rates is largest among borrowers least likely to default otherwise. These results suggest that strategic behavior should be an important consideration in designing mortgage modification programs.

We investigate whether homeowners respond strategically to news of mortgage modification programs by defaulting on their mortgages. We exploit plausibly exogenous variation in modification policy induced by U.S. state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers with mortgages throughout the country. Using a difference-in-difference framework, we find that Countrywide's relative delinquency rate increased more than ten percent per month immediately after the program's announcement. The borrowers whose estimated default rates increased the most in response to the program were those who appear to have been the least likely to default otherwise, including those with substantial liquidity available through credit cards and relatively low combined loan-to-value ratios. These results suggest that strategic behavior of borrowers should be an important consideration in designing mortgage modification programs.

We investigate whether homeowners respond strategically to news of mortgage modification programs. We exploit plausibly exogenous variation in modification policy induced by U.S. state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers with subprime mortgages throughout the country. Using a difference-in-difference framework, we find that Countrywide's relative delinquency rate increased thirteen percent per month immediately after the program's announcement. The borrowers whose estimated default rates increased the most in response to the program were those who appear to have been the least likely to default otherwise, including those with substantial liquidity available through credit cards and relatively low combined loan-to-value ratios. These results suggest that strategic behavior should be an important consideration in designing mortgage modification programs.

AbstractIntroductionGeographic and transportation barriers are associated with poorer HIV‐related health outcomes in sub‐Saharan Africa, but data on the impact of these barriers on prevention interventions are limited. We estimated the association between distance to clinic and other transportation‐related barriers on pre‐exposure prophylaxis (PrEP) uptake and initial clinic visit attendance in a rural community in southwestern Uganda enrolled in the ongoing SEARCH study (NCT01864603).MethodsCommunity‐wide HIV testing was conducted and offered to adult (≥15 years) participants in Ruhoko. Participants were eligible for PrEP based on an empiric risk score, having an HIV‐discordant partner, or self‐referral at either the community health campaign or during home‐based testing from March to April 2017. We collected data from PrEP‐eligible households on GPS‐measured distance to clinic, walking time to clinic and road difficulty. A sample of participants was also asked to identify their primary barriers to PrEP use with a semi‐quantitative questionnaire. We used multivariable logistic regression to evaluate the association between transportation barriers and (1) PrEP uptake among PrEP‐eligible individuals and (2) four‐week clinic visit attendance among PrEP initiators.ResultsOf the 701 PrEP‐eligible participants, 272 (39%) started PrEP within four weeks; of these, 45 (17%) were retained at four weeks. Participants with a distance to clinic of ≥2 km were less likely to start PrEP (aOR 0.34; 95% CI 0.15 to 0.79, p = 0.012) and less likely to be retained on PrEP once initiated (aOR 0.29; 95% CI 0.10 to 0.84; p = 0.024). Participants who were deemed eligible during home‐based testing and did not have the option of same‐day PrEP start were also substantially less likely to initiate PrEP (aOR 0.16, 95% CI 0.07 to 0.37, p < 0.001). Of participants asked to name barriers to PrEP use (N = 98), the most frequently cited were "needing to take PrEP every day" (N = 18) and "low/no risk of getting HIV" (N = 18). Transportation‐related barriers, including "clinic is too far away" (N = 6) and "travel away from home" (N = 4) were also reported.ConclusionsDistance to clinic is a significant predictor of PrEP uptake and four‐week follow‐up visit attendance in a community in rural Uganda. Interventions that address geographic and transportation barriers may improve PrEP uptake and retention in sub‐Saharan Africa.

On 15th November 2012 in Copenhagen, SUERF and Nykredit in association with Danmarks Nationalbank organised a conference on "Property prices and real estate financing in a turbulent world." The papers included in this SUERF Study are based on contributions to the conference.