The article discusses how mortgage contracts can include options for borrowers to reinstate their loans before foreclosure. By analyzing these options, researchers found that programs giving borrowers more time in default can lead to higher delinquency rates but also increase the chances of borrowers getting back on track. In stable housing markets, it's best for lenders to offer incentives for borrowers to catch up on payments and seek legal action for any remaining debt. Removing penalties for default doesn't help reduce costs. Borrowers' beliefs about their credit score greatly affect their likelihood of defaulting. Lenders should make it clear that defaulting will harm future credit opportunities.