Do Pre-Sale and Post-Sale Foreclosure Statutes Impact Foreclosure Starts?

Abstract

This paper examines the impact of state laws on foreclosure starts using mortgage, borrower, and economic data at the state level. Several models are studied to capture the impact of state-specific foreclosure laws and statutes, i.e. loss mitigation requirement before foreclosure, right to cure, and right to reinstate before sale. Data sources include Mortgage Bankers Association, Home Mortgage Disclosure Act, US Census, National Consumer Law Center-Survey of State Foreclosure Laws, and Experian. The study shows that statewide pre-and post-sale foreclosure-prevention statutes impact foreclosure starts. The results indicate statutory programs involving housing emergency assistance funds statistically slow foreclosure starts.