Mortgage Default Risks Associated with Earthquakes: An Analysis Based on the 1971 San Fernando Earthquake

摘要

Results are presented of a study undertaken to analyze the mortgage default process following the 1971 San Fernando earthquake. Net equity following the disaster is said to be the major influence of default. Related to this is the conclusion that net equity can be influenced by mortgage lenders, government agencies, and by others. Additionally, it is shown that nonproperty-related variables such as prior delinquency, the existence of secondary financing, divorce subsequent to loan origination, and marital status at origination influence default, especially default that culminates in foreclosure. Mortgage variables such as the loan-to-value ratio at loan origination revealed little or no independent effect on default. Differing default relationships were observed across different lenders, and it is suggested that lender attitude and behavior can have a mitigating or aggravating effect on default.