|Fields of interest:
Household Finance, Behavioural Economics & Finance, Financial Distress, Banking and Real Estate
Suite 3220 Evans Hall, P.O. Box 208200, New Haven CT 06520-8200
sean.hundtofte 'at' yale.edu
- No Such Thing as a Free Option? Loan Modifications and Mortgage Borrower Outcomes
- Analysis of the effects of offering debt relief to delinquent mortgage borrowers.
- Non-strategic Mortgage Borrower Behaviour: Sending Letters Can Improve Outcomes
- I use a field experiment to explore the role of non-strategic factors in the
exercise of two key options available to a mortgage borrower: default and prepayment.
Simple low-cost treatments increase prepayments in the short-run and decrease contractual delinquency in the long-run. I propose a Prospective Memory-based explanation of both facts. I find
the gradual decrease in defaults cannot be explained
by option-exercise or dual trigger models of default, and the temporary increase in prepayments cannot be explained by popular models of “rational inattention”.
Feel free to contact me for the latest draft of these papers.