This paper reviews recent research on mortgage default, focusing on the relationship of this research to the recent foreclosure crisis. Research on defaults was advanced both theoretically and empirically by the time the crisis began, but economists have moved the frontier further by improving data sources, building dynamic optimizing models of default, and explicitly addressing reverse causality between rising foreclosures and falling house prices.
This paper finds that graduates from universities that remove student loans from their financial aid policies are more likely to start entrepreneurial ventures and are more likely to subsequently get venture capital (VC) backing, particularly by reputed VCs, and get higher VC investment. Such ventures have higher sales and employment five years after founding. These results are stronger for universities with higher tuition and greater extent of R&D activity.
This paper studies the effects of available student loan repayment plans on borrowers’ career choices. By removing the risk of loan default, income driven repayment (IDR) plans make higher-paying but riskier jobs more attractive to those with moderate skill levels. The authors present experimental evidence that student loan recipients consider the repayment plans offered to them as well as the plans available to other borrowers as a reference in their evaluations of loans and careers.
The federal Fair Debt Collection Practices Act obliges debt collectors to provide certain notices to consumers from whom they are attempting to collect debts. This article is the authors’ second to report findings from the first academic study of consumer understanding of one of those notices, commonly called the validation notice or “g notice.” The authors showed consumers different versions of collection letters and then asked questions to measure their understanding of the notices.
Over the past
several years, chapter 13 debtors have used the Fair Debt Collection Practices
Act (FDCPA) as a tool to challenge debt buyers who file massive numbers of
proofs of claim for debt for which the statute of limitations has run. In
Midland Funding v. Johnson, the Supreme Court held that filing a proof of claim
for time-barred debt does not violate the FDCPA.
