Forbearance Phenomena
Last week, we analyzed a Federal Reserve study showing that unemployment is still inexorably linked to mortgage-default risk.  Here, we turn to a new Fed study assessing the broken link between unemployment and house prices.  It confirms that foreclosures during the 2007-09 crisis exacerbated housing-market distress, although it fails to acknowledge another study critical to its analysis: one we assessed showing that forbearance at the time in California also had surprisingly significant macroeconomic benefits.