Determinants of the Strategic Mortgage Default Cumulative Distribution Function

Abstract

This study discusses the many factors and considerations that enter into the strategic mortgage default (SMD) decision-making process. While it is not possible to construct a single cumulative distribution function (CDF) associated with this decision, it is important for policymakers to better understand what composes its shape as well as the range over which values occur. In this paper, I use both transactions-based and experiment-based data to suggest a theoretical shape of the SMD CDF.

Keywords: strategic mortgage default; morality; real estate law; cumulative distribution function

JEL Classification: K11, K12, K41, R20, R21