Zijie Liu

Job Market Paper

Servicing Debt Relief: Mortgage Forbearance and Credit Supply

(Draft coming soon. Preliminary draft available upon request.)

• Presentation: FMA (2026), SFA (2026), University of Rochester (2026)

• Abstract: I document an unintended credit-supply consequence of the Coronavirus Aid, Relief, and Economic Security (CARES) Act mortgage forbearance program. The policy allowed borrowers to pause payments but imposed liquidity and operational burdens on mortgage servicers. To address lenders' endogenous forbearance provision, I construct a shift-share exposure measure combining lenders' pre-pandemic geographic footprints with county forbearance rates and compare differentially exposed lenders within the same county-month. A one-standard-deviation increase in exposure reduces monthly mortgage originations by 10.5%–21.2% during March–December 2020. The contraction is stronger among lenders retaining servicing and banks with thinner liquidity buffers. High-exposure lenders approve fewer otherwise similar applications, charge higher rate spreads, and receive more consumer complaints, while borrower characteristics remain stable. My findings show that borrower relief can reduce new credit supply through intermediary liquidity and operational frictions.

Working Papers

Political Alignment and Household Risk-Taking: Evidence from U.S. Mortgage Market

with Yang Yi

• Presentations: AEA (2026, Poster), FMA (2025), SFA (2025), Eastern Finance Association (2025), CICF (2025), University of Rochester (2025), University of Alberta (2025), Boulder Summer Conference on Consumer Financial Decision Making (2025, Poster). (includes presentations by coauthors)

• Abstract: Do political shifts shape household leverage cycles? Comparing otherwise similar mortgage borrowers in consistently Democratic- and Republican-leaning areas, we find that those politically aligned with the U.S. president request larger loans and use higher leverage. Lender screening only partially offsets this surge in demand, yielding a 10% relative increase in originations in aligned regions. The effects intensify in politically homogeneous areas, during periods of heightened partisan conflict, and among financially unconstrained borrowers. Survey evidence shows that aligned individuals hold more optimistic housing market expectations. Yet these beliefs do not materialize in stronger fundamentals, leading to higher delinquency in aligned regions.

Publications

Need for Speed: High-Speed Rail and Firm Performance

with Chun Kuang and Wenyu Zhu

Journal of Corporate Finance, Volume 66, 2021  [SSRN]