The Mexico Mortgage Market Boom, Bust and Bail Out: Determinants of Borrower Default and Loan Restructure After the 1995 Currency Crisis

W00-3: The Mexican government has struggled to curtail growth of bad bank loans since the currency devaluation of December1994. This paper examines borrower choice to default or restructure mortgage loans under the initial phase of the government relief program called “The Accord for the Assistance of the Banking System” or ADE. It uses microdata from a commercial bank to test whether it was borrowers net equity or ability-to-pay that primarily drove them to default or restructure…