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NBER: Sean Hundtofte recommendation letter
Sean Hundtofte recommendation letter
>I am writing to recommend that Sean Hundtofte, a
>Yale finance Ph.D. candidate, be awarded a
>household finance research grant from the Sloan Foundation.
>
>Sean's project analyzes a very interesting
>randomized field experiment on modifying the
>terms of severely delinquent second-lien
>subprime mortgages in 2011. This is a question
>of great policy interest. In the aftermath of
>the financial crisis, there was much debate
>about whether modifying delinquent loans was
>socially desirable, and if so, why such
>modifications were not happening. Some argued
>that the legal structure of mortgage servicing
>arrangements prevented efficient modifications
>from happening. Others argued that legal
>impediments to modification were minimal, and
>such modifications were not occurring because
>they were unprofitable to creditors.
>
>Sean's results suggest that modifications areÂ
>profitable to creditors, as repayments rise when
>delinquent borrowers are offered standard
>"stip-to-mod" terms, which forgive principal if
>the borrower makes three payments at 25% of the
>original contracted amount. This suggests that
>modifications can be win-win, increasing
>repayments to creditors while reducing debt overhang for borrowers.
>
>However, a fuller assessment of mortgage
>modifications requires seeing what happens in
>other parts of the borrower's balance sheet. Is
>the borrower making those three payments by
>borrowing on other margins, or even allowing
>other debts to become delinquent? This is why it
>would be valuable for Sean to get funding, so
>that he can obtain credit reports on the borrowers and get this fuller picture.
>
>Sean's background gives him a deep knowledge of
>mortgage institutions. Between receiving his
>Yale MBA and entering the Ph.D. program, he
>worked for many years at a private equity firm
>that invests in consumer debt servicing
>companies. I am confident that he has the
>ability to take this paper over the finish line
>and make a very nice contribution.
>
>Sincerely yours,
>James Choi
>
>
>--
>James J. Choi
>Yale School of Management
><http://faculty.som.yale.edu/jameschoi/>http://faculty.som.yale.edu/jameschoi/
Received on Tue May 27 2014 - 15:15:26 EDT
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