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Exploring the Design of Financial Counseling for Mortgage Borrowers in Default

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  • J. Collins

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    Abstract

    This paper analyzes the effects of counseling provided to borrowers in mortgage default (n = 299). Borrowers receiving more hours of counseling perceive counseling more favorably than those receiving fewer hours of counseling. Using measures of marketing efforts to instrument counseling time confirms the positive effect of counseling duration on borrower ratings of counseling. Borrowers are more likely to attend additional counseling sessions after receiving face-to-face counseling as opposed to telephone counseling, although preference among modes can largely be explained by time in counseling. Each additional hour of counseling reduces the marginal probability of a borrower moving to a more severe stage of foreclosure. Counseling could be more successful if provided for longer durations regardless of the delivery mode. Copyright Springer Science+Business Media, LLC 2007

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    File URL: http://hdl.handle.net/10.1007/s10834-007-9061-z
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    Bibliographic Info

    Article provided by Springer in its journal Journal of Family and Economic Issues.

    Volume (Year): 28 (2007)
    Issue (Month): 2 (June)
    Pages: 207-226

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    Handle: RePEc:kap:jfamec:v:28:y:2007:i:2:p:207-226

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    Web page: http://www.springerlink.com/link.asp?id=104904

    Related research

    Keywords: Credit counseling; Foreclosure; Mortgage default counseling;

    References

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    1. Robert G. King & Alexander L. Wolman, 2004. "Monetary Discretion, Pricing Complementarity, and Dynamic Multiple Equilibria," The Quarterly Journal of Economics, MIT Press, vol. 119(4), pages 1513-1553, November.
    2. Michael E. Staten & Gregory Elliehausen & E. Christopher Lundquist, 2003. "The impact of credit counseling on subsequent borrower credit usage and payment behavior," Proceedings 881, Federal Reserve Bank of Chicago.
    3. Valentina Hartarska & Claudio Gonzalez-Vega, 2005. "Credit Counseling and Mortgage Termination by Low-Income Households," The Journal of Real Estate Finance and Economics, Springer, vol. 30(3), pages 227-243, April.
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    Cited by:
    1. David Evans & Jean Lown, 2008. "Predictors of Chapter 13 Completion Rates: The Role of Socioeconomic Variables and Consumer Debt Type," Journal of Family and Economic Issues, Springer, vol. 29(2), pages 202-218, June.
    2. Jay Zagorsky, 2013. "Do People Save or Spend Their Inheritances? Understanding What Happens to Inherited Wealth," Journal of Family and Economic Issues, Springer, vol. 34(1), pages 64-76, March.
    3. Cliff Robb, 2011. "Financial Knowledge and Credit Card Behavior of College Students," Journal of Family and Economic Issues, Springer, vol. 32(4), pages 690-698, December.
    4. Rebecca Haynes-Bordas & D. Kiss & Tansel Yilmazer, 2008. "Effectiveness of Financial Education on Financial Management Behavior and Account Usage: Evidence from a ‘Second Chance’ Program," Journal of Family and Economic Issues, Springer, vol. 29(3), pages 362-390, September.
    5. John M. Barron & Michael E. Staten, 2012. "Is Technology-Enhanced Credit Counseling as Effective as In-Person Delivery?," NFI Working Papers 2012-WP-05, Indiana State University, Scott College of Business, Networks Financial Institute.
    6. J. Collins, 2011. "Mortgage Mistakes? Demographic Factors Associated with Problematic Loan Application Behaviors," Journal of Family and Economic Issues, Springer, vol. 32(4), pages 586-599, December.
    7. Miller, Margaret & Reichelstein, Julia & Salas, Christian & Zia, Bilal, 2014. "Can you help someone become financially capable ? a meta-analysis of the literature," Policy Research Working Paper Series 6745, The World Bank.
    8. Sumit Agarwal & Souphala Chomsisengphet & Lawrence Mielnicki, 2008. "Do Forbearance Plans Help Mitigate Credit Card Losses?," Journal of Family and Economic Issues, Springer, vol. 29(2), pages 191-201, June.
    9. Benjamin Levinger & Marques Benton & Stephan Meier, 2011. "The Cost of Not Knowing the Score: Self-Estimated Credit Scores and Financial Outcomes," Journal of Family and Economic Issues, Springer, vol. 32(4), pages 566-585, December.
    10. Lei Ding & Roberto G. Quercia & Janneke Ratcliffe, 2008. "Post-purchase Counseling and Default Resolutions among Low- and Moderate-Income Borrowers," Journal of Real Estate Research, American Real Estate Society, vol. 30(3), pages 315-344.
    11. Robert Scott, 2010. "Credit Card Ownership Among American High School Seniors: 1997–2008," Journal of Family and Economic Issues, Springer, vol. 31(2), pages 151-160, June.
    12. Andrew Carswell, 2009. "Does Housing Counseling Change Consumer Financial Behaviors? Evidence from Philadelphia," Journal of Family and Economic Issues, Springer, vol. 30(4), pages 339-356, December.

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