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State Foreclosure Laws and Mortgage Origination in the Subprime

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  • Quinn Curtis

Abstract

Foreclosure procedures in some states are considerably swifter and less costly for lenders than in others. In light of the foreclosure crisis, an empirical understanding of the effect of foreclosure procedures on the mortgage market is critical. This study finds that lender-favorable foreclosure procedures are associated with more lending activity in the subprime market. The study uses hand-coded state foreclosure law variables to construct a numerical index measuring the favorability of state foreclosure laws to lenders. Mortgage origination data from state-border areas shows that lender-friendly foreclosure is associated with an increase in subprime originations, but has less effect on the prime market. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Quinn Curtis, 2014. "State Foreclosure Laws and Mortgage Origination in the Subprime," The Journal of Real Estate Finance and Economics, Springer, vol. 49(3), pages 303-328, October.
    • Handle: RePEc:kap:jrefec:v:49:y:2014:i:3:p:303-328
    DOI: 10.1007/s11146-013-9437-9
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    References listed on IDEAS

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    Cited by:

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    3. Balatti, Mirco & López-Quiles, Carolina, 2021. "Limited liability, strategic default and bargaining power," Working Paper Series 2519, European Central Bank.
    4. Olsen, Edgar O. & Zabel, Jeffrey E., 2015. "US Housing Policy," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 887-986, Elsevier.

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