FHFA Paper: "The Marginal Effect of First-Time Homebuyer Status on Mortgage Default"

Here is a new paper from FHFA Senior Economist Saty Patrabansh: The Marginal E ect of First-Time Homebuyer Status on Mortgage Default and Prepayment During the housing bubble, there an increase in first time buyers as shown in the first graph below (from paper). Also first time homebuyers defaulted at a higher rate than repeat buyers. Patrabansh shows that the higher default rate for first-time homebuyers is related to borrower differences, and, after adjusting for these differences, first-time hombuyers defaulted at the same rate as repeat homebuyers.  From the conclusion:......(read more)

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