The Journal of Real Estate Finance and Economics

, Volume 53, Issue 3, pp 346–367 | Cite as

Differential Impacts of Structural and Cyclical Unemployment on Mortgage Default and Prepayment

  • Roberto G. Quercia
  • Anthony Pennington-Cross
  • Chao Yue Tian


The Great Recession (the fourth quarter of 2007 through the second quarter of 2009) has been characterized by high rates of foreclosures and unemployment. Using a sample of community reinvestment loans, we examine the impact of structural unemployment and cyclical unemployment on mortgage terminations (default and prepayment). We find that mortgage default and prepayment are more sensitive to changes in the structural component of the local unemployment rate than in the cyclical component. In addition, depending on whether structural unemployment rates are high or low, borrowers and lenders react differently to the incentives to terminate a loan.


Structural and cyclical unemployment Mortgage performance 

JEL Codes

D12 G21 R22 


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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  • Roberto G. Quercia
    • 1
  • Anthony Pennington-Cross
    • 2
  • Chao Yue Tian
    • 1
  1. 1.University of North Carolina at Chapel HillChapel HillUSA
  2. 2.Marquette UniversityMilwaukeeUSA

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