IDEAS home Printed from https://ideas.repec.org/a/wly/empleg/v13y2016i4p809-836.html
   My bibliography  Save this article

Homeowner Representation in the Foreclosure Crisis

Author

Listed:
  • Emily S. Taylor Poppe

Abstract

The dramatic increase in the number of homeowners entering the foreclosure process over the past decade has been well documented. While some of these cases end in foreclosure, many homeowners are able to secure alternate outcomes. There is reason to believe that legal representation may help homeowners to achieve more favorable outcomes. However, other aspects of the foreclosure process, particularly those instituted to increase court oversight and homeowner participation, may circumscribe the benefits of legal representation. In this article, I investigate whether homeowners with legal representation are more likely to avoid foreclosure than those who are unrepresented, taking into account procedural reforms that might shape the effectiveness of legal representation. Using a representative sample of residential foreclosure cases initiated in New York City between 2007 and 2011, I find that cases where the homeowner has legal representation less frequently end in foreclosure. However, after accounting for the enactment of reforms to the foreclosure process, the probability of foreclosure is not significantly different for cases where the homeowner has legal representation. The results suggest that the characteristics of the foreclosure process may be consequential for the resolution of foreclosure cases and the benefit of legal representation. This research contributes to scholarship on the use and effect of lawyers by considering the role of legal representation for homeowners facing foreclosure in the context of the rapid social and economic changes of the Great Recession.

Suggested Citation

  • Emily S. Taylor Poppe, 2016. "Homeowner Representation in the Foreclosure Crisis," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 13(4), pages 809-836, December.
    • Handle: RePEc:wly:empleg:v:13:y:2016:i:4:p:809-836
    DOI: 10.1111/jels.12134
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jels.12134
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jels.12134?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dan Immergluck, 2013. "Too Little, Too Late, and Too Timid: The Federal Response to the Foreclosure Crisis at the Five-Year Mark," Housing Policy Debate, Taylor & Francis Journals, vol. 23(1), pages 199-232, January.
    2. Doviak, Eric & MacDonald, Sean, 2011. "Who enters the foreclosure process?," MPRA Paper 34276, University Library of Munich, Germany.
    3. Gerardi, Kristopher & Lambie-Hanson, Lauren & Willen, Paul S., 2013. "Do borrower rights improve borrower outcomes? Evidence from the foreclosure process," Journal of Urban Economics, Elsevier, vol. 73(1), pages 1-17.
    4. Kristopher Gerardi & Eric Rosenblatt & Paul S. Willen & Vincent W. Yao, 2012. "Foreclosure externalities: some new evidence," Public Policy Discussion Paper 12-5, Federal Reserve Bank of Boston.
    5. Dana, James D, Jr & Spier, Kathryn E, 1993. "Expertise and Contingent Fees: The Role of Asymmetric Information in Attorney Compensation," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 9(2), pages 349-367, October.
    6. Ellen, Ingrid Gould & Lacoe, Johanna & Sharygin, Claudia Ayanna, 2013. "Do foreclosures cause crime?," Journal of Urban Economics, Elsevier, vol. 74(C), pages 59-70.
    7. Pollack, C.E. & Lynch, J., 2009. "Health status of people undergoing foreclosure in the Philadelphia region," American Journal of Public Health, American Public Health Association, vol. 99(10), pages 1833-1839.
    8. Chan, Sewin & Gedal, Michael & Been, Vicki & Haughwout, Andrew, 2013. "The role of neighborhood characteristics in mortgage default risk: Evidence from New York City," Journal of Housing Economics, Elsevier, vol. 22(2), pages 100-118.
    9. Clauretie, Terrence M & Herzog, Thomas N, 1990. "The Effect of State Foreclosure Laws on Loan Losses: Evidence from the Mortgage Insurance Industry," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 22(2), pages 221-233, May.
    10. Houle, Jason N., 2014. "Mental health in the foreclosure crisis," Social Science & Medicine, Elsevier, vol. 118(C), pages 1-8.
    11. Donald B. Rubin, 2005. "Causal Inference Using Potential Outcomes: Design, Modeling, Decisions," Journal of the American Statistical Association, American Statistical Association, vol. 100, pages 322-331, March.
    12. Derek S. Hyra & Gregory D. Squires & Robert N. Renner & David S. Kirk, 2013. "Metropolitan Segregation and the Subprime Lending Crisis," Housing Policy Debate, Taylor & Francis Journals, vol. 23(1), pages 177-198, January.
    13. Engel, Kathleen C. & McCoy, Patricia A., 2011. "The Subprime Virus: Reckless Credit, Regulatory Failure, and Next Steps," OUP Catalogue, Oxford University Press, number 9780195388824, Decembrie.
    14. J. Michael Collins & Carolina Reid, 2010. "Who receives a mortgage modification? Race and income differentials in loan workouts," Community Development Working Paper 2010-07, Federal Reserve Bank of San Francisco.
    15. Daniel Immergluck & Geoff Smith, 2005. "The impact of single-family mortgage foreclosures on neighborhood crime," Proceedings 955, Federal Reserve Bank of Chicago.
    16. J. Michael Collins & Ken Lam & Christopher E. Herbert, 2011. "State mortgage foreclosure policies and lender interventions: Impacts on borrower behavior in default," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(2), pages 216-232, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Matthew Hall & Kyle Crowder & Amy Spring, 2015. "Variations in Housing Foreclosures by Race and Place, 2005–2012," The ANNALS of the American Academy of Political and Social Science, , vol. 660(1), pages 217-237, July.
    2. John Y. Campbell, 2013. "Mortgage Market Design," Review of Finance, European Finance Association, vol. 17(1), pages 1-33.
    3. Chan, Sewin & Haughwout, Andrew & Tracy, Joseph, 2015. "How Mortgage Finance Affects the Urban Landscape," 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 987-1045, Elsevier.
    4. Janelle Downing & Andrew Karter & Hector Rodriguez & William H Dow & Nancy Adler & Dean Schillinger & Margaret Warton & Barbara Laraia, 2016. "No Spillover Effect of the Foreclosure Crisis on Weight Change: The Diabetes Study of Northern California (DISTANCE)," PLOS ONE, Public Library of Science, vol. 11(3), pages 1-11, March.
    5. Aidong Adam Ding & Shaonan Tian & Yan Yu & Xinlei Zhao, 2022. "Does judicial foreclosure procedure help delinquent subprime mortgage borrowers?," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 19(2), pages 382-422, June.
    6. Lawrence R. Cordell & Liang Geng & Laurie Goodman & Lidan Yang, 2013. "The cost of delay," Working Papers 13-15, Federal Reserve Bank of Philadelphia.
    7. Alexander C Tsai, 2015. "Home Foreclosure, Health, and Mental Health: A Systematic Review of Individual, Aggregate, and Contextual Associations," PLOS ONE, Public Library of Science, vol. 10(4), pages 1-21, April.
    8. Mr. Jochen R. Andritzky, 2014. "Resolving Residential Mortgage Distress: Time to Modify?," IMF Working Papers 2014/226, International Monetary Fund.
    9. Daxuan Zhao & Yonglin Wang & Tien Foo Sing, 2019. "Impact of Foreclosure Laws on Mortgage Loan Supply and Performance," The Journal of Real Estate Finance and Economics, Springer, vol. 58(2), pages 159-200, February.
    10. Downing, Janelle, 2016. "The health effects of the foreclosure crisis and unaffordable housing: A systematic review and explanation of evidence," Social Science & Medicine, Elsevier, vol. 162(C), pages 88-96.
    11. Arnab Biswas & Hamilton Fout & Anthony Pennington-Cross, 2023. "Mortgage Losses under Alternative Property Disposition Approaches: Deed-in-Lieu, Short Sales, and Foreclosure Sales," The Journal of Real Estate Finance and Economics, Springer, vol. 66(3), pages 603-635, April.
    12. Hartley, Daniel, 2014. "The effect of foreclosures on nearby housing prices: Supply or dis-amenity?," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 108-117.
    13. Vásquez-Vera, Hugo & Palència, Laia & Magna, Ingrid & Mena, Carlos & Neira, Jaime & Borrell, Carme, 2017. "The threat of home eviction and its effects on health through the equity lens: A systematic review," Social Science & Medicine, Elsevier, vol. 175(C), pages 199-208.
    14. Keith Ihlanfeldt & Tom Mayock, 2016. "The Variance in Foreclosure Spillovers across Neighborhood Types," Public Finance Review, , vol. 44(1), pages 80-108, January.
    15. Mandai, Yu & Nakabayashi, Masaki, 2018. "Stabilize the peasant economy: Governance of foreclosure by the shogunate," Journal of Policy Modeling, Elsevier, vol. 40(2), pages 305-327.
    16. Lambie-Hanson, Lauren, 2015. "When does delinquency result in neglect? Mortgage distress and property maintenance," Journal of Urban Economics, Elsevier, vol. 90(C), pages 1-16.
    17. Milonas, Kristoffer, 2017. "The effect of foreclosure laws on securitization: Evidence from U.S. states," Journal of Financial Stability, Elsevier, vol. 33(C), pages 1-22.
    18. Gerardi, Kristopher & Rosenblatt, Eric & Willen, Paul S. & Yao, Vincent, 2015. "Foreclosure externalities: New evidence," Journal of Urban Economics, Elsevier, vol. 87(C), pages 42-56.
    19. Balatti, Mirco & López-Quiles, Carolina, 2021. "Limited liability, strategic default and bargaining power," Working Paper Series 2519, European Central Bank.
    20. Tsai, Ming Shann & Chiang, Shu Ling & Miller, Chen, 2016. "A study on the distribution of the foreclosure lag, its expected capital opportunity cost and its analyses," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 45(C), pages 156-170.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:empleg:v:13:y:2016:i:4:p:809-836. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1740-1461 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.