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The effects of a foreclosure moratorium on loan repayment behaviors

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  • Collins, J. Michael
  • Urban, Carly

Abstract

During the 2008 housing crisis, lenders were accused of making mistakes when repossessing homes, spurring some policymakers to call for a moratorium on foreclosure filings. Using a New Jersey court-ordered stay on foreclosure-related filings that applied to six high-profile lenders and a difference-in-difference-in-differences strategy, this paper shows that loans impacted by the moratorium are no more likely to be observed as in default as comparable loans not subject to the court order. Borrowers, and lenders, appear to respond in ways that did not result in the strongly negative effects initially predicted by critics at the time, and this policy may have accomplished the intended consumer protection goals.

Suggested Citation

  • Collins, J. Michael & Urban, Carly, 2018. "The effects of a foreclosure moratorium on loan repayment behaviors," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 73-83.
    • Handle: RePEc:eee:regeco:v:68:y:2018:i:c:p:73-83
    DOI: 10.1016/j.regsciurbeco.2017.10.010
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    1. Berlinger, Edina & Kiss, Hubert János & Khayouti, Sára, 2022. "Loan forbearance takeup in the Covid-era - The role of time preferences and locus of control," Finance Research Letters, Elsevier, vol. 50(C).
    2. Edina Berlinger & Sára Khayouti & Hubert János Kiss, 2022. "Time discounting predicts loan forbearance takeup," CERS-IE WORKING PAPERS 2201, Institute of Economics, Centre for Economic and Regional Studies.
    3. Stephanie Moulton & Yung Chun & Stephanie Casey Pierce & Roberto Quercia & Sarah Riley & Holly Holtzen, 2022. "Does Temporary Mortgage Assistance for Unemployed Homeowners Reduce Longer‐Term Mortgage Default? An Analysis of the Hardest Hit Fund Program," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 41(2), pages 515-551, March.

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