Snow Job: Strategic Defaults in an Era of Negative Equity


As more home mortgages slide underwater, both the logical and moral cases for stressed borrowers to remain current in their payments are being called into question. Although the need to honor the terms of a mortgage contract is deeply embedded in the American ethos, increasingly the numbers simply don't work, especially for those who are out of work and hopelessly upside down in their equity position. Here the author takes an real-world view of the predicament both borrowers and lenders, as well as the larger real estate finance market, find themselves in. He takes an objective assessment of the advantages and disadvantages for all parties at interest should home buyers in significant numbers decide to choose default as a rational option.

Snow Job: Strategic Defaults Appear More Sensible in an Era of Negative Equity

By Richard Zahm

Nearly one out of every three homes with a mortgage is now worth less than its loan amount. Deutsche Bank projects that by the first quarter of 2011, this figure will increase to 48 percent. Virtually one out of every two homes carrying a loan, or 25 million households, will have zero equity. The current aggregate value of negative equity loans in the US is estimated to be around $3.4 trillion.

It's an astounding figure. Twenty-five million households are the equivalent of the entire U.S. denominations of the Methodist, Mormon, Lutheran, Presbyterian, and Episcopal churches…combined. It's greater than the total populations of Arizona, Colorado, Nevada, Oregon, Washington, and Utah… combined.

The phenomenon is more astounding for this reason: Faced with a total loss of equity in their homes, and little sign of a recovery, only a small percentage of people have so far taken what would appear to be the rational economic move: walk away. Even more remarkable is that fewer than one in 10 homeowners polled feel that they could walk away.

They're not staying put purely for economic reasons, or because it's a hassle to move. They're continuing to shovel good money after bad because they believe doing otherwise is simply not right, and because they're afraid of the consequences.

The trouble is, at some point a tipping point is likely to be reached. In a market economy, failing to optimize is itself an irrational sin. The notion of what is bad or immoral and what makes good sense can shift. Given the sheer size of the population faced with an identical financial challenge, and the enormity of the negative equity, society's norms can turn on a dime.

There are countless examples of people walking away from bad investments, even in real estate. Ghost towns from the 19th century dot the Western states. Small towns in the Midwest have been shriveling for years. People forgo down payments made on condominiums. More than 30,000 houses have been abandoned in the City of Detroit. People have walked away before. And they can do it again.

Google "strategic mortgage default" and review some of the 1.1 million entries. We're in the midst of a paradigm shift. In a time of dramatically changing views not only as to real estate's role as an investment, but the relationship between borrower and lender, the question arises: will social norms trump economic rationality?

More importantly, can strategic defaulters provide the first wave of a market clearing force that neither lenders nor government have been willing to bring to bear?

Avalanche Conditions.

Mountain snowpacks don't inevitably turn into avalanches. The right conditions are necessary. Snow binds to earlier snow layers. Crystals combine with each other to meld into a common covering that turns to water in the spring.

"Depth hoar" is a thin layer that develops between snowfalls. It doesn't bond, like frosting inside a cake. Result: Snow layers are separated by what are in effect slippery ball bearings. With the right trigger—motion, sound—top layers of snow will crack away, slide on the hoar, and plunge downward.

The depth hoar in the mortgage market is just as thin and unstable. Economics doesn't account well for consumers spending more—often, a lot more—for something that can be had for less. When it comes to upside-down mortgages, the snowpack is resting almost entirely on a tenuous layer of borrower emotions. Triggering events are all around.

Honor, Fear, and FICO Scores.

According to the government and the mortgage industry, a good American honors his debts. President Obama has urged homeowners to follow the "responsible" course with regard to their mortgage. Department of Housing and Urban Development-approved housing counselors are instructed to counsel people to avoid foreclosure. Former Treasury Secretary Henry Paulson said that "any homeowner who can afford his mortgage payment but chooses to walk away from an underwater one is simply a speculator—and one who is not honoring his obligation." (Paulson perhaps avoided speculation during his three decades at Goldman Sachs.)

Mortgage defaults, it is argued, are amoral, or at least antisocial, serving to accelerate foreclosures, driving down neighboring home prices. The trouble is, market economies specifically separate people from the impact of their economic decisions. Consumers are exhorted to recycle and to use less water and electricity, and they do. But at what point are they supposed to make deep personal financial sacrifices to benefit others? And to whom? The banks?

Strategic defaults ("ruthless defaults," "walkaways") are closely considered financial decisions made by borrowers who are capable of continuing to make their mortgage payments, but who choose not to.

The distinction between voluntary walkaways and foreclosed-upon wretches is a fine line. The former, it would seem, take a planned approach and continue to pay their monthly credit card bills after they stop making their mortgage payments. They either immediately buy a similar, lower priced house nearby, or move into a comparable rental, significantly lowering their monthly housing expenses.

The foreclosed-upon, in contrast, are forced into losing their homes, often victims of external triggers such as illness or job loss. Although strategic defaulters enjoy newfound financial freedom, the foreclosed take shelter in the basements of relatives, their children sleeping on the couch.

From the lender's position, the result is the same: They're missing a mortgagee and they've now got a house. But the portrayal of the strategic defaulter is dramatically different.

Walkaways, also argue, attack the very essence of a borrower. A deal's a deal; a promise to pay means just that. Despite the fact that lenders often solicited the borrower's business, created the loan products, performed the underwriting, oversaw the appraisal, and collected origination and servicing points and fees, borrowers are considered completely at fault when larger market forces engage.

At what point is it moral to damage a family's future to save a lender? The idea that a borrower should continue to pay in a hopeless situation works well for lenders, but what if it doesn't make any sense to a borrower?

Lenders emphasize that a borrower's credit history goes beyond a three-digit score. It reflects the borrower's character, his integrity, his standing in the community. It is used not only to forecast the likelihood of a future loan being repaid: Increasingly, employers are adding Fair Isaac and Company (FICO) scores into the job offer mix.

The tension lies between a borrower making a rational economic decision and exercising legal rights and protections afforded him… and the trashing of his reputation, sense of self, and ability to obtain employment. Although nonrecourse regimes aim to protect people from disingenuous marketing, flawed underwriting, and unjustified price inflation, financial institutions respond with character attacks that extend well into the future.

This "asymmetrical bargaining position" described by University of Arizona law professor Brent White serves to pin all blame on homeowners who, at the time of purchase, were making rational investments—and often staking their life savings to boot. Lenders have been steadily losing the moral high ground. Banks have been unable to dissipate growing populism and a widespread desire for some type of payback.

Despite this, only 10 percent of homeowners say they would walk away from their homes if they felt financially vulnerable and if they owe more than their homes are worth. When questioned more closely, however, the figures change. Once negative equity reaches 50 percent of the loan amount, 20 percent of homeowners would send in the keys. Lenders suspect that one out of every four borrowers who are defaulting are able to make their monthly payments.

Changed Paradigms.

We are a nation of optimists, and when it comes to our homes, unrealized losses are easy to sweep under the rug. The market, the thinking goes, will come back and things will be fine. We all need a roof over our heads. But the degree to which we're upside down works against this particular American Dream. Of the 11 million households with negative equity, about half owe 20 percent more than their homes are currently worth.

Let's assume for the moment we've reached some type of price bottom for houses, and that historical appreciation rates of around 2 percent resume. In 10 years, borrowers 20 percent underwater could see the reappearance of their first dollar of equity. For those 50 percent out of the money, the wait could be a lot longer: A quarter century.

The intervening decades could bring other penalties stemming from home buying and financing decisions made between '04 and '08. Property taxes would be paid on property worth significantly less than assessed values. Adjustable rate mortgages will have reset, presumably up. Month after month, money will be shoveled into an investment that will likely never break even.

The "joys of homeownership" would extend beyond aging roofs, leaking plumbing, and crabgrass. Homeowners would become virtual tenants, owners in name only, taking cold comfort in their annual home interest deductions as their properties slowly appreciated to levels last seen in their youth.

Strategic Defaults.

The 2 million or so walkaways since 2007 (the number doubled in '08, and likely doubled again last year) are excoriated as deadbeats working the system, attacking the moral pact between lender and borrower. Many, it's claimed, gamed the lending system using adjustable rate loans that downplayed—or ignored—underwriting basics such as verification of income. Many borrowed against their homes to purchase cars, pay college tuition, and whatever else they wanted at the time. Why should they benefit from their imprudence?

Lenders define strategic defaulters as borrowers who have the financial wherewithal to continue making mortgage payments, but who choose not to. Their exit is planned. They're often financially sophisticated, highly educated, have high credit scores and—most important—large loan balances. They go from making every loan payment to making no loan payment. They typically keep current on their credit card payments throughout.

Walking away is a carefully planned and organized undertaking. The signal difference for lenders is that the "trigger event" need not be a life event—divorce, illness, or job loss. The trigger can be the state of the local real estate market and real estate finance itself. Strategic defaulters don't necessarily send in their keys because they have to. They do it because they want to.

The math is relatively straightforward. Example:

House bought in 2006: $500,000

Projected value in 2010: $600,000

Actual value in 2010: $250,000

Exit strategy: Refinance with new loan

Current monthly payments: $1,500

Monthly payment at reset: $3,000

Comparable house rental: $1,200

Walkaways occur in clusters, roughly by neighborhood, as if techniques are explained around weekend barbeques, where no social stigma is attached. Although described as a ruthless business decision by lenders, 64 percent of strategic defaulters walk away from their primary residence. The move is highly personal. It's not an arm's-length transaction: it involves uprooting the kids.

The process isn't as simple as sending in the keys—even in a nonrecourse state. Companies such as Youwalkaway.com offer guidance and assistance with correspondence with lenders ($995).

People who've planned and executed a walkaway note that their initial intent was often not particularly sophisticated—or ruthless. Deciding that their homes were significantly underwater, they contact their lender to discuss a modification or a short sale. The lender or servicer reviews their loan file and financials (or not). Borrowers are then either ignored, peremptorily denied, or lost in the bureaucratic shuffle. They then decide to take matters into their own hands.

A typical path:

Rent the mortgaged home on a month-to-month basis and move out to a rental. This serves to increase income and decrease the debt ratio, allowing the borrower to qualify for a bigger loan and to begin saving cash. Pay down credit cards. Make big purchases requiring good credit, such as a car.

Identify a house to buy (perhaps the rental that the borrower is already in). Qualify for a new FHA loan and buy the house at the current fair market value, or simply continue to rent.

Contact the lender again to request a short sale or deed in lieu. Lenders can be more amenable at this juncture. If not, mail in the keys.

The borrower's credit score takes a hit, and if the property is located in a recourse state, the borrower could be liable for the difference between the fair market value of the property when the lender sells it and the outstanding loan amount.

Trigger Events.

Lenders traditionally focused on two elements in underwriting a home loan: 1) The value of the home itself, combined with the ratio of owner equity to the loan amount and this value (LTV); and 2) The borrower's capacity to make monthly loan payments. With the rise of the residential secondary market, where loans were packaged for sale, the equation shifted. A new emphasis arose on the borrower's likelihood to make the mortgage payments, based on the borrower's credit score.

Lenders created the loan products that ultimately failed. Historical house prices have carried a price: Commercial rent ratio of 15:1. At the peak, lenders were making loans at a ratio of 38:1.

The historical view was that homeowners would make extraordinary efforts to avoid defaulting on their mortgage payments. Late or no payments came about only after extraordinary "trigger events" in a mortgagee's life: Divorce, prolonged illness, or the loss of a job. With rising home values, blips in payment histories were problematic. There was almost always some equity to protect banks' interests, or some stopgap financing alternative.

Today, trigger events have expanded to systemic elements. Borrowers are impacted not only by personal life-altering experiences, but by externalities that have nothing to do with them, or with their investment decision – other than causing them to cough up higher monthly payments.

A recent example was the uptick of the Cosi Index last New Year's Eve. A common benchmark used to set rates on many adjustable rate mortgages, Cosi's jump was a result of fallout from bank mergers dating to 2006. For borrowers, this translated into a payment jolt of as much as 9 percent. On a $500,000 mortgage, this added another $200 to the monthly nut. Overnight.

Outside events also include the much more widespread impact of rate changes, tax code modifications, bank policies, and foreclosures. Events aren't confined to the housing market, either. Increases in health insurance premiums, gas prices, income tax, college tuition, and food prices all compete for their share of the paycheck. Homeowners—or at least the ones who bought or refinanced since 2005—are completely exposed.

Walkaway Consequences.

As more than a million people filing bankruptcy every year learn, life continues even after their credit scores are trashed. They can still buy cars on credit. They still have credit cards (secured) and debit cards. They can still rent apartments and houses.

Bankruptcy is a nuclear strike on a consumer's credit score. Filing alone delivers a 355-365 point hit (out of top scores of around 800) and outright disqualification from obtaining any extension of credit from many lenders. The black mark follows the borrower for ten years.

Short sales can trigger drops of 120-130 points; strategic defaults bring slightly heavier penalties, 140-150 points. The negative mark attaches to a credit record for seven years.

Ironically, late mortgage payments can have a bigger impact than outright default. FICO scores can easily plunge 200 points merely through nonpayment of a mortgage for a period of 60 to 90 days—something that lenders generally require of borrowers seeking loan modifications.

Credit recovery takes place remarkably quickly. Faced with the choice of foregoing credit card payments and incurring stress-related expenses stemming from high debt levels, the temporary black eye could be well worth it. Walkaways also join the crowd: Credit scores have been dropping steadily throughout the recession, especially for those with higher ratings.

Within three years, strategic defaulters could qualify for federally-insured FHA loans to buy another house.

Recourse and Nonrecourse.

In broad terms, states embracing nonrecourse policies provide borrower protection on real estate purchase loans. Under "one act" rules, lender remedies are generally limited to foreclosing on the property securing the loan.

The Federal Reserve Bank of Richmond lists 11 states as nonrecourse: Alabama, Alaska, California, Iowa, Minnesota, Montana, North Carolina, Oregon, Washington, and Wisconsin.

Nonrecourse laws date from the 19th century, a response to predatory lending practices and a conscious decision that protecting citizens was more important than protecting lenders. Lenders, not borrowers, were held to be in a better position to judge the real estate market and to determine the value of collateral. Limits on loan recovery were thought to be a tool that would keep lenders responsible, while creating a lasting lesson that would deter future real estate bubbles.

The remaining recourse states allow lenders to seek deficiency judgments for amounts over and above the fair market value of the real property after foreclosure and sale. But as a practical matter, states have erected hedgerows of filing dates and requirements, burdens of proof, and time extensions to severely discourage lenders from pursuing deficiency claims.

FHA lenders can't seek deficiency judgments; they're strongly discouraged on Virginia loans. Most states make some distinction between purchase money mortgages and other types of residential mortgages, such as seconds and home equity lines. The result is still the same: The cost of seeking judgments in time and effort simply exceeds the amount that might be collectible in the future.

Studies predating the collapse of housing prices estimated that the fear and threat of deficiency judgment might serve to dissuade strategic defaulters by as much as 20 percent. At the same time, the magnitude of negative equity easily nullifies this consideration. The bigger the mortgage, the bigger the equity gap, the more likely a default, regardless of the location of the property.

Friendly Foreclosures.

Principal modification or forgiveness is, with the exception of outright default, the least attractive alternative for lenders. Write downs account for less than 10 percent of all modifications.

Reasons: Write downs are permanent, immediately impacting banks' balance sheets while reducing the amount of interest received over the remaining life of the loan. For borrowers, they're a one-time event. But more importantly, they're virtually always made in amounts less than the amount of negative equity.

Lenders are also placed in the position of having to decide which borrowers will enjoy principal reductions, and which will not, a difficult proposition. Should principal reductions be limited to those who ask, or those who are sufficiently underwater? And if loan modifications are deemed acceptable, why aren't more efficient strategic defaults?

To lenders, there are gradations of default. Borrowers are treated differently during and after the default process depending on the time spent and losses recognized by lenders.

Time is an issue, because properties depreciate while they're in foreclosure, especially in steadily declining markets. Borrowers have little incentive to maintain homes that they know they'll be vacating.

Foreclosure is also expensive. Filing and administrative costs aside, foreclosed homes typically recoup 28 percent of their loan value—if that.

There are three ways to default: Short sale, voluntary conveyance, and agreeing not to contest a foreclosure. Borrower and lender discord stems from borrower desire to exit with minimal credit score damage, while the lender seeks a rapid conclusion to the matter with minimal liability and reserve account issues.

Short sales involve the sale of the property at fair market value. The lender waives its right to a deficiency judgment. Voluntary conveyances such as deed-in-lieu exchange the deed for a forgiveness of debt. The borrower's credit is affected less severely, but the lender shoulders risk: Subordinate liens on the property are not cut off and the borrower can declare bankruptcy within one year, and the court may declare the conveyance improper. Noncontest agreements provide borrowers the benefits of short sales, while affording liability protection to lenders. It also has the advantage of speed.

Friendly foreclosures bring an additional benefit: Lenders are more willing to extend future loans to borrowers who default through a short sale or a deed-in-lieu, even if credit scores drop by the same amount.

Avalanche Zones.

Prime conditions for strategic walkaways include:

A high rate of adjustable rate and subprime loans. By 2011, 66 percent of Alt-A borrowers could be underwater; 68 percent of subprime and 89 percent of option ARMs. 41 percent of prime and 46 percent of jumbo prime are forecast to be negative by then;

High level of borrower sophistication;

High income levels;

High negative equity amounts; and

High vacant housing levels.

Underwater homes are relatively localized and centered on the coasts. Forty-two percent of the homes with negative equity are located in two states. California has approximately 2.4 million and Florida has around 2 million.

It's also a relatively centralized condition. Nevada, Arizona, and California currently lead the pack, with underwater loans representing 61 percent, 51 percent and 42 percent, of all loans in each state, respectively. Future growth areas include the New York metro area, Colorado's Front Range, and urban Oregon and Washington.

It's projected that more than 90 percent of loans will be underwater in areas including Ft Lauderdale, Miami, West Palm Beach, and Las Vegas.

Current negative equity accounts for the following:

By state:

California: $969 billion;

Florida: $432 billion;

New Jersey: $146 billion;

Illinois: $146 billion; and

Arizona: $140 billion.

By city:

Los Angeles: $310 billion;

New York: $183 billion;

Miami: $152 billion;

Washington, D.C.: $149 billion; and

Chicago: $134 billion

Source: Negative Equity Report, Deutsche Bank

The San Francisco region (Marin, San Francisco, San Mateo, Contra Costa, Alameda, and Santa Clara counties) contain virtually all of the conditions conducive to strategic defaults. In addition to a large number of jumbo mortgages, the area has two times the national rate of adjustable mortgages: California was the cradle of aggressive residential loan products.

Solutions.

The starting point for developing an answer to the housing finance mess is the recognition that for at least 11 million Americans, the entire notion of home ownership has been stood on its head. For them, buying a home was likely one of the worst investment decisions they've ever made.

Their down payments have vaporized, their loan payments are poised to re-set, and, unable to sell, they're stuck in place. Lifestyles made possible by tapping home equity lines are history.

Instead of providing a springboard to financial independence and security, homes have become a pit where one hopes and waits for the housing market to recover. For many, the wait could be for the rest of their lives. The notion of a home as an asset has been replaced. Homes may well be the ultimate liability.

This comes at a time when use and enjoyment are vying with ownership. CDs and DVDs have given way to iTune downloads and NetFlix. ZipCars rented by the hour are expanding beyond cities and campuses. The notion is: Why pay to own when you can use? Especially when what you own isn't gaining in value.

Having a home is an immutable satisfaction: "This is mine." But in the same way that e-readers are posed to uproot publishing and printing business models—and as the Internet has torn apart newspapers, and TV—so will new home financing models. The sheer size of the negative equity situation brings this on: $3.4 trillion in upside down loans removes this from a simple "market recovery" model.

Smaller families, higher divorce rates, less leisure time, aging baby boomers, rising energy costs, and shifting job markets combine to make familiar housing—and housing finance—models outdated. The relationship between homeownership and happiness might be breaking.

There will always be a demand for shelter, for "home." The question is what cost will be acceptable for this? Lacking the investment incentive, the "joys of homeownership" begin to pale—interest payment deductions notwithstanding. If a house isn't a good investment, what's the rationale of devoting 38 percent or more of each paycheck to it?

Are strategic defaulters on the cutting edge, early adopters of an ultra-rational investment strategy? Unswayed by lender threats or by government pronouncements, they could be viewed as market pioneers, rugged individuals who have truly grasped and acted upon current real estate opportunities.

In years past, they might have discussed home appreciation at backyard cocktail parties. The conversation in the future could be how little they spent for their new homes, and how much they saved themselves by walking away.

Unlike house "flippers" focusing on the arbitrage between distribution inefficiencies in the foreclosure market, walkaways use the leverage of the entire housing market in their favor.

In so doing, they provide an immediate, efficient market clearing service. The houses they leave are disposed of by lenders at current fair market value using loan products that reflect risk consensus today. The houses they purchase reflect current value as well. Strategic defaulters can be seen as helping lenders clean up their balance sheets. "Extend and pretend" and "kicking the can"—lender palliatives that mainly serve to distort the market and prolong the time to recovery—are shunted aside.

Policy Challenges.

The challenge in crafting strategies comes from not understanding why people are acting as they do. Homeowner decisions bounce between optimism, fear, and desire. Government policies are already in place to foster walkaways, and yet government pronouncement is against it.

Obama Administration programs such as the Home Affordable Modification Program (HAMP) have received mixed reviews. The salient focus has been to buy time, slowing the flow of foreclosed homes to the market, spreading the pain over a longer period.

Loan modifications embrace term extensions and interest rate reductions, resulting in some decreases in monthly payments. But recidivism rates are high: Most analysts assume that a large percentage of borrowers who obtain modifications will default again within 12 to 18 months. Reason: They don't address principal distortion.

Loan modification programs might provide some stabilizing influence as the economy and job market improve, creating a de facto speed brake or foreclosure moratorium. But the fact remains that most modifications don't make economic sense for borrowers…or for lenders.

Minimal governmental changes could have huge, immediate impact.

States could make it easier for their citizens to retreat from bad housing investments. Nonrecourse protections could be extended to borrowers in a variety of ways, expanding coverage to all primary residential real estate loans, or all loans secured by all residential real estate types—second homes, 1-4 family, or mixed use; purchase money loans, second mortgages, or piggy back loans. Anti-deficiency laws offering greater protection could be expanded.

Tax relief programs have been implemented: The Mortgage Forgiveness Debt Relief Act of '07 suspends the treatment of unpaid mortgage debt as income through 2012. Programs could be expanded, benefiting both borrowers and lenders. These would be more than offset from increased tax receipts resulting from a resurgence of consumer spending as mortgage payments are directed elsewhere.

The use of credit scores for non-credit related purposes could be proscribed. The Fair Credit Reporting Act (FCRA) could be amended to prevent lenders from reporting mortgage defaults. By extension, employers could be prohibited from inquiring about a candidate's credit score. A potential employee's age, religion, marital status, and health are considered off-limits at interviews. Why shouldn't disappointing outcomes of past real estate investments be treated the same?

Forced cram-downs by ZIP codes or Census tracts could provide relief under Chapter 13 bankruptcies, but this involves a borrower's assets in totality—something that nonrecourse jurisdictions have sought to protect. This approach could also create gridlock in the bankruptcy system.

Less radical surgery could be carried out by converting mortgages to shared equity loans. Loans would be reset to reflect current market value, with lenders and borrowers splitting any appreciation at sale perhaps with some government backing.

Conclusion.

Strategic walkaways employ laws established to protect them from predatory or avaricious lending practices. They create an efficient, rapid, cost-efficient mark to market, stripping away inaccurate and illusory pricing practices that lenders cling to. Solving the mortgage crisis is going to take more than nibbling away at the edges of valuation, tweaking monthly loan payments through interest rate adjustments and loan extensions.

The stakes are enormous. The American economy is consumer-driven, and $3.4 trillion has been stalled in the home equity quagmire. The immediate goal has to be to put money back into the pockets of consumers, who will inject it into the economy. They can continue to shovel it into lenders' maws…or they can invest it, spend it, and get on with their lives. Homeowners—taxpayers—didn't create the housing mess on their own. In cleaning it up, they shouldn't be stuck with the bill.

The solution is to push "reset" and allow the market to accurately reflect the current fair market value of houses, today.

Richard Zahm is a direct lender and portfolio manager based in Connecticut and California. He may be reached at richzahm@gmail.com.

References.

Eggert, Kurt (2007): O`What Prevents Loan Modifications? Housing Policy Debate 18, 279-297.

Foote, Gerard (2009) Federal Reserve Bank of Boston Working Paper 09-2

Foote, Gerard, J of Urban Economics 64(2) 234-45

Guiso, Luigi, Paola Sapienza and Luigi Zingales (2009): O`Moral and Social Constraints to

Strategic Default on Mortgages.O´ Working paper, European University Institute, Kellogg

School of Management and Chicago Booth School of Business.

Quercia, Roberto G., Lei Ding and Janneke Ratcliffe (2009): O`Loan Modifications and Redefault Risk: An Examination of Short-Term Impact.O´ Working paper, University of North Carolina.

Weaver, Karen, O`Drowning in Debt – A Look at Underwater Homeowners,O´ Deutsche Bank Report, August 2009.

Copyright©2010 by The Bureau of National Affairs, Inc.