Fernando Ferreira, Joseph Gyourko, 19 June 2015

The recent housing bust has been among the most notable economic events of recent years. This column argues that the foreclosure crisis was something much more than a subprime sector issue. Though the housing crisis started as a subprime sector event, it was quickly dominated by prime borrowers losing their homes. The findings also indicate that the main predictor of home loss, regardless of borrower’s type, has been the current loan-to-value ratio.

Giovanni Favara, Mariassunta Giannetti, 24 April 2015

During financial crises, fire sales (or forced asset sales) could further aggravate the financial fragility. However, evidence on why agents do not take actions to avoid collateral liquidation is scant. This column uses data on foreclosures and house prices from the US housing crisis to present new evidence on the issue. The authors argue that lenders with a large share of outstanding mortgages internalise the negative spillovers of liquidation. Thus, they might be more likely to renegotiate and avoid price-default spirals. 

Atif Mian, Francesco Trebbi, Amir Sufi, 10 February 2011

Several academics, policymakers, and regulators emphasise the role of foreclosures in the Great Recession and subsequent global crisis. This column provides one of the first attempts to show this empirically. Using micro-level data from all US states, it shows that foreclosures had a significant negative effect on house prices, residential investment, durable consumption – and consequently the real economy.


CEPR Policy Research