mortgage default (Elul, Souleles and Chomsisenghept). This model suggests that home owners should only ever default if they have negative equity in their residence. If there is negative equity, then there would be an incentive for the borrower to walk away from the property. However this also does not consider subsidiary effects such as the impact upon the person's credit or the possibility that the property could regain equity in the medium or long-term. Furthermore, other researchers have also proposed that other factors such as being illiquid would also provide a motive for someone to default on their mortgage. A combination of these two variables would also act to amplify the incentive to voluntarily default; and of course being so illiquid that there is no possibility to make a mortgage payment virtually guarantees that a default will occur.

Although this research paper does not necessarily define its hypothesis directly, it...
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