We measure the causal impact of reductions in benchmark interest rates on the renegotiation and performance of distressed loans, using 2000s subprime mortgages as a laboratory. Subprime borrowers treated with larger benchmark rate reductions benefited from increased debt-renegotiation probabilities and lower debt-service payments. Modification rates were similar among current and delinquent borrowers but higher for real estate investors, highlighting the role of financial acumen in renegotiation. Renegotiations also reduced longerrun foreclosures, but treated borrowers who lingered in delinquency offset these benefits. Findings suggest monetary easing can spur debt renegotiation but alone may not lead to longer-run curative outcomes. (JEL E52, E58, R20, R30)

中文翻译：

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危机期间利率下降对陷入困境的借款人的影响


我们以 2000 年代的次级抵押贷款为实验室，衡量基准利率降低对不良贷款的重新谈判和绩效的因果影响。基准利率大幅下调的次级借款人受益于债务重新谈判可能性的增加和偿债付款的减少。当前借款人和拖欠借款人的修改率相似，但房地产投资者的修改率更高，凸显了财务敏锐度在重新谈判中的作用。重新谈判还减少了长期丧失抵押品赎回权的情况，但那些长期拖欠债务的借款人抵消了这些好处。调查结果表明，货币宽松可以刺激债务重新谈判，但仅凭这一点可能不会带来长期的治疗效果。 （JEL E52、E58、R20、R30）