TCD Seminar, January 23: Resolving Residential Mortgage Distress: Time to Modify?

 IIIS Seminar Room,  Level 6, TCD Arts Block

9am-10am,  Friday January 23

Resolving Residential Mortgage Distress: Time to Modify? 

Jochen R. Andritzky (IMF)



Summary: In housing crises, high mortgage debt can feed a vicious circle of falling housing prices and declining consumption and incomes, leading to higher mortgage defaults and deeper recessions. In such situations, resolution policies may need to be adapted to help contain negative feedback loops while minimizing overall loan losses and moral hazard. Drawing on recent experiences from Iceland, Ireland, Spain, and the United States, this paper discusses how economic trade-offs affecting mortgage resolution differ in crises. Depending on country circumstances, the economic benefits of temporary forbearance and loan modifications for struggling households could outweigh their costs.