Do Borrower Rights Improve Borrower Outcomes?  Evidence from the Foreclosure Process

Gerardi, Kristopher; Lambie‐Hanson, Lauren; Willen, Paul S.

doi:10.3386/w17666

Cited by 40 publications

(13 citation statements)

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“…Policymakers should consider this finding when designing well-intentioned policies that lengthen the foreclosure timeline. As discussed by Gerardi, Lambie-Hanson, and Willen (2013), judicial foreclosure proceedings and state-specific right-to-cure periods lengthen the average foreclosure timeline but do not improve the probability that borrowers self-cure their mortgage defaults or receive mortgage modifications. Policies that lengthen the foreclosure process extend the time properties are in ownership limbo, which could result in more problems from deferred maintenance.…”

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

When does delinquency result in neglect? Mortgage distress and property maintenance

Lambie‐Hanson

2015

Journal of Urban Economics

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Abstract:Studies of foreclosure externalities have overwhelmingly focused on the impact of forced sales on the value of nearby properties, typically finding modest evidence of foreclosure spillovers. However, many quality-of-life issues posed by foreclosures may not be reflected in nearby sale prices. This paper uses new data from Boston on constituent complaints and requests for public services made to City government departments, matched with loan-level data, to examine the timing of foreclosure externalities. I find evidence that property conditions suffer most while homes are bank owned, although reduced maintenance is also common earlier in the foreclosure process. Since short sales prevent bank ownership, they should result in fewer neighborhood disamenities than foreclosures.

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Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

When does delinquency result in neglect? Mortgage distress and property maintenance

Lambie‐Hanson

2015

Journal of Urban Economics

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“…Mian et al (2011) argue that US states that slow down foreclosures have recently performed better than those that allow rapid foreclosures; Gerardi et al (2011) counter that slower foreclosures still take place eventually, generating the same or perhaps even greater external e¤ects as houses are occupied for longer periods of time by distressed owners.…”

Section: Mortgage Modi…cationmentioning

confidence: 99%

Mortgage Market Design

Campbell¹

2012

119

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This paper explores the causes and consequences of cross-country variation in mortgage market structure. It draws on insights from several fields: urban economics, asset pricing, behavioral finance, financial intermediation, and macroeconomics. It discusses lessons from the credit boom, the challenges of mortgage modification in the aftermath of the boom, consumer financial protection, and alternative mortgage forms and funding models. The paper argues that the US has much to learn from mortgage finance in other countries, and specifically from the Danish implementation of the European covered bonds system.

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“…These studies identified a wide range of factors that affect mortgage outcomes, with state laws governing foreclosure, the amount of home equity, credit scores at origination, and presence of junior liens among the most significant (Voicu et al 2012b;Chan et al 2013;Gerardi et al 2013). Interventions, such as mortgage default counseling, were also shown to substantially increase the probability that a borrower receives a loan modification and reduce the probability of foreclosure ).…”

Section: Previous Literaturementioning

confidence: 99%

The determinants of subprime mortgage performance following a loan modification

Schmeiser

Gross

2015

FEDS

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We examine the evolution of mortgage modification terms obtained by distressed subprime borrowers during the recent housing crisis, and the effect of the various types of modifications on the subsequent loan performance. Using the CoreLogic LoanPerformance dataset that contains detailed loan level information on mortgages, modification terms, second liens, and home values, we estimate a discrete time proportional hazard model with competing risks to examine the determinants of post-modification mortgage outcomes. We find that principal reductions are particularly effective at improving loan outcomes, as high loan-to-value ratios are the single greatest contributor to re-default and foreclosure. However, any modification that reduces total payment and interest (P&I) reduces the likelihood of subsequent re-default and foreclosure. Modifications that involve increasing the loan principal-primarily through capitalized interest and fees-are more likely to fail, even controlling for changes in P&I.

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Do Borrower Rights Improve Borrower Outcomes? Evidence from the Foreclosure Process

Cited by 40 publications

References 0 publications

When does delinquency result in neglect? Mortgage distress and property maintenance

When does delinquency result in neglect? Mortgage distress and property maintenance

Mortgage Market Design

The determinants of subprime mortgage performance following a loan modification

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