The Adjustable Balance Mortgage: Reducing the Value of the Put
提出一种新型抵押贷款合同，通过内生捕捉房价下跌风险来最小化违约风险，同时保持利率接近标准固定利率抵押贷款的成本，减少法律系统在缓解房价风险中的作用，从而降低违约带来的负外部性和社会成本。
We propose a new mortgage contract that endogenously captures the risk of house price declines to minimize default risk resulting from changes in the underlying asset value while still retaining contract rates near the cost of a standard fixed‐rate mortgage. By reducing the role of the legal system in mitigating house price risk, the new mortgage reduces the negative externalities and social costs arising from defaults. In other words, the new mortgage minimizes the need to use the legal foreclosure system to deal with the economic risk of house price declines.