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Do Restrictions on Home Equity Extraction Contribute to Lower Mortgage Defaults? Evidence from a Policy Discontinuity at the Texas Border

By Anil Kumar

American Economic Journal: Economic Policy, February 2018

Texas is the only US state that limits home equity borrowing to 80 percent of home value. This paper exploits this policy discontinuity around Texas' interstate borders and uses a multidimensional regression discontinuity design framework to find that lim...