Questioning the low mortgage default rate
While the foreclosure rate has risen steadily, the mortgage default rate has remained relatively low, Richard H. Thaler observes in a New York Times commentary. Thaler draws on a study by Brent White, a law professor at the University of Arizona, which concludes that some homeowners continue to pay their mortgages, Thaler says, because "they think they are obligated to repay their loans even if it is not in their financial interest to do so, while their lenders are free to do whatever maximizes profits." That may no longer be an appropriate practice now that lenders are rarely the local banker, this piece suggests.
NYTimes.com | 01/23
This story published in CPA Letter Daily on 01/25/2010
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