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Journal of Political Economy Vol. 125 No. 3 2017

Policy Intervention in Debt Renegotiation: Evidence from the Home Affordable Modification Program

Sumit Agarwal1; Gene Amromin2; Itzhak Ben-David; Souphala Chomsisengphet3; Tomasz Piskorski4; Amit Seru4

1 National University of Singapore · 2 Federal Reserve Bank of Chicago · 3 Office of the Comptroller of the Currency · 4 National Bureau of Economic Research

Abstract

We evaluate the effects of the 2009 Home Affordable Modification Program (HAMP) that provided intermediaries with sizable financial incentives to renegotiate mortgages. HAMP increased intensity of renegotiations and prevented a substantial number of foreclosures but reached just one-third of its targeted indebted households. This shortfall was in large part due to low renegotiation intensity of a few large intermediaries and was driven by intermediary-specific factors. Exploiting regional variation in the intensity of program implementation by intermediaries suggests that the program was associated with a lower rate of foreclosures, consumer debt delinquencies, house price declines, and an increase in durable spending.

DOI
10.1086/691701
Volume
125
Issue
3
Pages
654-712
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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