-Nonrecourse Mortgage and Housing Price Boom, Bust, and Rebound

This paper investigates the impact of -nonrecourse vs. recourse mortgages on housing price dynamics in major U.S. metropolitan statistical areas for the period from 2000 to 2013. We find evidence that -nonrecourse states experience faster price growth during the boom period (2000-2006), a sharper price drop during the bust period (2006-2009) and faster price recovery in the rebound period after a crisis (2009-2013). Moreover, the volatility of housing prices is higher in nonrecourse states than in recourse states, particularly during the rebound period.