Forced Moves and Home Maintenance: The Amplifying Effects of Mortgage Payment Burden on Underwater Homeowners
John P. Harding, Jing Li, Stuart S. Rosenthal & Xirui Zhang
Real Estate Economics, August 2021
Although well-known that high CLTV is necessary for mortgage default, the amplifying effect of
high PTI that can force families to move has received limited attention. Using the 1985-2013
AHS panel, the authors show that high CLTV by itself has little effect on mobility, but high PTI prompts
families to move and especially so when CLTV is high. Evidence also indicates that high PTI
and CLTV discourage home maintenance. The authors' estimates suggest that loan modifications that
lower PTI will likely be more effective at helping underwater families to remain in their homes
and avoid mortgage default as compared to policies that lower CLTV.
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