State mortgage foreclosure policies and lender interventions: Impacts on borrower behavior in default
AbstractDue to the rise in foreclosure filings, policymakers are increasingly concerned with helping families in financial distress keep their homes. This paper tests the extent to which distressed mortgage borrowers benefit from three types of state foreclosure polices: (1) judicial foreclosure proceedings, (2) statutory rights of redemption, and (3) statewide foreclosure-prevention initiatives. Based on an analysis of borrowers in default who reside in 22 cross‐state metropolitan statistical area pairs, state policies generally have weak effects. Both judicial foreclosure proceedings and foreclosure prevention initiatives are associated with modest increases in loan modification rates. Using a matching procedure, a lender's letter promoting mortgage default counseling was associated with increases in loan modifications, decreases in loan cures, and decreases in foreclosure starts. The effects of the letter were also stronger in states with judicial proceedings. (C) 2011 by the Association for Public Policy Analysis and Management.
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Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.
Volume (Year): 30 (2011)
Issue (Month): 2 (Spring)
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Web page: http://www3.interscience.wiley.com/journal/34787/home
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- Kristopher Gerardi & Lauren Lambie-Hanson & Paul S. Willen, 2011.
"Do borrower rights improve borrower outcomes?: evidence from the foreclosure process,"
Public Policy Discussion Paper
11-9, Federal Reserve Bank of Boston.
- 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.
- Kristopher Gerardi & Lauren Lambie-Hanson & Paul S. Willen, 2011. "Do Borrower Rights Improve Borrower Outcomes? Evidence from the Foreclosure Process," NBER Working Papers 17666, National Bureau of Economic Research, Inc.
- Kristopher Gerardi & Lauren Lambie-Hanson & Paul S. Willen, 2011. "Do borrower rights improve borrower outcomes? Evidence from the foreclosure process," Working Paper 2011-16, Federal Reserve Bank of Atlanta.
- Larry Cordell & Liang Geng & Laurie Goodman & Lidan Yang, 2013. "The cost of delay," Working Papers 13-15, Federal Reserve Bank of Philadelphia.
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