Credit

Negative Equity, Not Job Loss, Primary Driver of Defaults 

Analysts at Amherst Securities ask the “big question in the mortgage market”: “Will the next wave of defaults be driven by unemployment or by negative equity?” Ask and answer. In a report published this week, Laurie Goodman and her team demonstrate that negative equity is far more predictive of loan defaults than is unemployment. The question is critical, because the policy response depends on the answer.