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Exploring the Design of Financial Counseling for Mortgage Borrowers in Default

  • J. Collins


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    This paper analyzes the effects of counseling provided to borrowers in mortgage default (n = 299). Borrowers receiving more hours of counseling perceive counseling more favorably than those receiving fewer hours of counseling. Using measures of marketing efforts to instrument counseling time confirms the positive effect of counseling duration on borrower ratings of counseling. Borrowers are more likely to attend additional counseling sessions after receiving face-to-face counseling as opposed to telephone counseling, although preference among modes can largely be explained by time in counseling. Each additional hour of counseling reduces the marginal probability of a borrower moving to a more severe stage of foreclosure. Counseling could be more successful if provided for longer durations regardless of the delivery mode. Copyright Springer Science+Business Media, LLC 2007

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    Article provided by Springer in its journal Journal of Family and Economic Issues.

    Volume (Year): 28 (2007)
    Issue (Month): 2 (June)
    Pages: 207-226

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    Handle: RePEc:kap:jfamec:v:28:y:2007:i:2:p:207-226
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    1. Michael E. Staten & Gregory E. Elliehausen & E. Christopher Lundquist, 2003. "The impact of credit counseling on subsequent borrower credit usage and payment behavior," Proceedings 881, Federal Reserve Bank of Chicago.
    2. Robert G. King & Alexander L. Wolman, 2003. "Monetary discretion, pricing complementarity and dynamic multiple equilibria," Proceedings, Board of Governors of the Federal Reserve System (U.S.).
    3. Valentina Hartarska & Claudio Gonzalez-Vega, 2005. "Credit Counseling and Mortgage Termination by Low-Income Households," The Journal of Real Estate Finance and Economics, Springer, vol. 30(3), pages 227-243, April.
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