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The determinants of state foreclosure rates: investigating the case of Indiana

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  • Leslie McGranahan

Abstract

Foreclosure rates are defined as mortgages in the foreclosure process as a percentage of all mortgages. These rates vary fairly dramatically across states. While the average foreclosure rate in the 50 states and the District of Columbia in the second quarter of 2007 was 1.25 percent, these rates ranged from a high of 3.60 percent in Ohio to a low of 0.44 percent in Wyoming. One state that has exhibited high foreclosure rates over the past decade is Indiana. Indiana ranked second highest after Ohio in the second quarter of 2007 with a foreclosure rate of 3.01 percent. The goal of this article is to look at the determinants of state foreclosure rates with particular attention to the set of factors referred to in discussions of Indiana?s high rates. Three primary factors have been responsible for Indiana?s high foreclosure rates: the poor performance of the housing market and economy, the high levels of subprime and FHA borrowing in the state, and the relatively long duration of Indiana foreclosures. However, even after taking these factors into account, Indiana?s foreclosure rates are higher than would be anticipated.

Suggested Citation

  • Leslie McGranahan, 2007. "The determinants of state foreclosure rates: investigating the case of Indiana," Profitwise, Federal Reserve Bank of Chicago, issue Dec, pages 1-7.
    • Handle: RePEc:fip:fedhpw:y:2007:i:dec:p:1-7
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    File URL: http://www.chicagofed.org/digital_assets/publications/profitwise_news_and_views/2007/pnv_redec07_web_all.pdf
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    References listed on IDEAS

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    1. Tatom, John, 2007. "Why is the foreclosure rate so high in Indiana?," MPRA Paper 4674, University Library of Munich, Germany.
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    Cited by:

    1. Kelly D. Edmiston, 2009. "Characteristics of high foreclosure neighborhoods in the Tenth District," Economic Review, Federal Reserve Bank of Kansas City, vol. 94(Q II), pages 51-75.

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    Keywords

    Unemployment; Foreclosure;

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