The hazard rates of first and second defaults

This article examines hazards of repeated mortgage default, conditional on reinstating out of an initial default episode. Results indicate that subseq uent default risk for reinstated borrowers is significantly greater than th e risk of first default, especially during the first two years after a defa ult episode. In addition, economic factors helpful in predicting first defa ults are not helpful in predicting subsequent default episodes. This has im portant implications for mortgage investors and servicers as industry forec losure avoidance efforts intensify.