Publications

October 2008 (Revised August 2009)
Case

Subprime Crisis and Fair-Value Accounting

By: Paul M. Healy, Krishna G. Palepu and George Serafeim

This case examines the challenges in implementing fair value accounting for mortgage instruments, the role of accounting in the sub-prime crisis, and proposals for revising accounting standards given the crisis. View Details

Keywords: Fair Value Accounting; Financial Crisis; Debt Securities; Mortgages; Standards

02 Feb 2012
Op-Ed

Once a Castle, Home is Now a Debtors’ Prison

sell the house, is considering abandoning it, and has cut back on maintenance, which depresses the value further. If a few houses on a block are underwater, the blight will depress the values even of well-kept homes. Accepting this new reality, lenders might allow the... View Details

Keywords: by Nicolas P. Retsinas; Financial Services; Construction; Real Estate

March 8, 2008
Comment

Marketing Your Way Through a Recession

By: John A. Quelch

The signs of an imminent recession are all around us. The spillover from the subprime mortgage crisis is weakening both consumer confidence and the consumer spending—much of it on credit—that has been buoying the U.S. economy. View Details

Keywords: Marketing; Recession; Products And Sales; Core Values; Fluctuation; Volatility; Economic Growth; Economic Slowdown and Stagnation; Growth and Development; Marketing Strategy; Product Marketing; Risk and Uncertainty; Salesforce Management; Asia; Europe; Latin America; North and Central America

2010
Working Paper

Who Selected Adjustable-Rate Mortgages? Evidence from the 1989-2007 Surveys of Consumer Finances

We find evidence that households selecting adjustable-rate mortgages (ARMs) during the recent decade were disproportionately those who were less suspicious or who may have had difficulty understanding complicated ARM features that became commonplace prior to the... View Details

Keywords: Household; Financial Crisis; Mortgages; Personal Finance

September 2021
Article

Did Technology Contribute to the Housing Boom? Evidence from MERS

By: Stefan Lewellen and Emily Williams

We examine the effects of the Mortgage Electronic Registration System, or MERS, on mortgage origination volumes and foreclosure rates prior to the Great Recession. MERS was introduced in the late 1990s and significantly reduced the cost and time associated with... View Details

Keywords: Credit Supply; Housing Boom; Financial Innovation; Nonbank Lenders; Mortgages; Credit; Expansion; Information Technology; Outcome or Result

March 2006 (Revised April 2006)
Case

International Place (A): Boston Real Estate Playoff

First International Place, one of Boston's premier office buildings, was the subject of a control contest in 2005, as the New York real estate firm Tishman Speyer purchased the mortgage on the property through a sealed bid auction process and then sought to foreclose... View Details

Keywords: Valuation; Mortgages; Auctions; Insolvency and Bankruptcy

April 2000 (Revised June 2000)
Case

E-Loan: The CarFinance.com Acquisition

E-Loan is an online mortgage lender that acquired an auto-lending arm in August of 1999. This case examines E-Loan's purchase of CarFinance.com and highlights E-Loan's strategy-setting process. In addition, the case explores business development as a strategic process... View Details

Keywords: Strategic Planning; Internet and the Web; Change Management; Growth and Development Strategy; Financial Services Industry

2024
Working Paper

Does Pension Automatic Enrollment Increase Debt? Evidence from a Large-Scale Natural Experiment

By: John Beshears, Matthew Blakstad, James J. Choi, Christopher Firth, John Gathergood, David Laibson, Richard Notley, Jesal D. Sheth, Will Sandbrook and Neil Stewart

Does automatic enrollment into retirement saving increase household debt? We study the randomized roll-out of automatic enrollment pensions to ~160,000 employers in the United Kingdom with 2-29 employees. We find that the additional savings generated through automatic... View Details

Keywords: Retirement; Saving; Personal Finance; Borrowing and Debt; Credit; Compensation and Benefits

May 2020
Article

How Quantitative Easing Works: Evidence on the Refinancing Channel

By: Marco Di Maggio, Amir Kermani and Christopher Palmer

We document the transmission of large-scale asset purchases by the Federal Reserve to the real economy using rich borrower-linked mortgage-market data and an identification strategy based on mortgage market segmentation. We find that central bank QE1 MBS purchases... View Details

Keywords: Monetary Policy; MBS; Quantitative Easing; LSAP; Refinancing; Deleveraging; HARP; GSE; Central Banking; Global Range; Financing and Loans; Credit; United States

SSRN

February 2022
Article

Borrowing to Save? The Impact of Automatic Enrollment on Debt

By: John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian and William L. Skimmyhorn

Does automatic enrollment into a retirement plan increase financial distress due to increased borrowing outside the plan? We study a natural experiment created when the U.S. Army began automatically enrolling newly hired civilian employees into the Thrift Savings Plan.... View Details

Keywords: Retirement Savings; Automatic Enrollment; Choice Architecture; Nudge; Financial Distress; Retirement; Saving; Borrowing and Debt; Behavior

2018
Working Paper

Bank Risk-Taking and the Real Economy: Evidence from the Housing Boom and Its Aftermath

By: Antonio Falato, Giovanni Favara and David Scharfstein

The short-termism of lenders amplifies boom-bust credit cycles, leading in turn to real costs for the aggregate economy. During the U.S. housing credit boom, publicly-traded banks increased mortgage lending activity and relaxed standards much more than privately-held... View Details

Keywords: Risk and Uncertainty; Financial Markets; Investment; Corporate Finance; Banks and Banking

January 2008 (Revised September 2009)
Case

Financing American Housing Construction in the Aftermath of War

By: David Moss and Cole Bolton

At the start of WWI, the United States faced a significant housing shortage. Public officials feared the spread of disease—and even communism—in the nation's cramped urban centers where vacancy rates held near zero and families often "doubled up" in single-housing... View Details

Keywords: Central Banking; Bonds; Mortgages; Government Legislation; Business History; Housing; Banking Industry; United States

March 2006 (Revised May 2010)
Case

Banco Hipotecario S.A.

By: Daniel Baird Bergstresser, Arthur I Segel and Alexandra de Royere

In 2003, the chairwoman and controlling shareholder of Argentina's leading residential mortgage lender are considering how to bring the bank's restructuring to a successful conclusion as the country's economy continues to suffer from the impact of the 2001-2002... View Details

Keywords: Restructuring; Currency; Banks and Banking; Mortgages; Crisis Management; Competition; Argentina

01 Oct 2009
Working Paper Summaries

Systemic Risk and the Refinancing Ratchet Effect

Keywords: by Amir E. Khandani, Andrew W. Lo & Robert C. Merton; Construction; Real Estate

February 2009 (Revised February 2022)
Case

Fannie Mae: Public or Private?

By: David A. Moss, Cole Bolton and Kimberly Hagan

In 1987, President Ronald Reagan established the President's Commission on Privatization to identify federal government functions that could be shifted to the private sector. One agency that the Commission considered was the Federal National Mortgage Association, or... View Details

Keywords: Restructuring; Financial Institutions; Mortgages; Government and Politics; Business History; Privatization; Private Sector; Laws and Statutes; United States

27 Jan 2011
Working Paper Summaries

A Brief Postwar History of US Consumer Finance

Keywords: by Andrea Ryan, Gunnar Trumbull & Peter Tufano; Banking

February 1991 (Revised November 1993)
Exercise

Valuation and Discounted Cash Flows

A set of five exercises in valuation of simple fixed income securities. No capital budgeting. Students use present value analysis to compute discounted cash flows. Situations/concepts covered include: future value; mortgage payment and repayment; calculating implicit... View Details

Keywords: Finance

October 2011 (Revised April 2013)
Case

Kroll Bond Rating Agency

The established credit raters were criticized for inflating the mortgage credit bubble that imploded in 2008. A new rating agency, KBRA, is considering how to capitalize on the opportunity this presents and how to enter the industry. A small group of managers have to... View Details

Keywords: Financial Instruments; Financial Management; Financial Services Industry

January 1993 (Revised November 1997)
Case

BayBank Boston

In 1992, the Federal Reserve released a study of mortgage lending patterns in Boston. It concluded that even when credit factors were taken into account, black and Hispanic applicants experienced higher rejection rates. Richard Pollard, chairman of BayBank Boston, had... View Details

Keywords: Prejudice and Bias; Ethics; Race; Mortgages; Banking Industry; Boston