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Effects of Bankruptcy Exemptions and Foreclosure Laws on Mortgage Default and Foreclosure Rates

Author Info

  • Chintal Desai
  • Gregory Elliehausen
  • Jevgenijs Steinbuks

    ()

Abstract

This study analyzes the effects of state bankruptcy asset exemptions and foreclosure laws on mortgage default and foreclosure rates across different segments of the mortgage market. We found that the effects of these legal provisions are larger for subprime than for prime mortgages and larger for adjustable rate mortgages than for fixed rate mortgages. These results demonstrate that the effect of variation in bankruptcy exemptions and foreclosure laws is most pronounced in the most risky segments of the mortgage market, which are those that have been most affected by the continuing housing slump in the United States. Copyright Springer Science+Business Media, LLC 2013

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File URL: http://hdl.handle.net/10.1007/s11146-012-9366-z
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Article provided by Springer in its journal The Journal of Real Estate Finance and Economics.

Volume (Year): 47 (2013)
Issue (Month): 3 (October)
Pages: 391-415

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Handle: RePEc:kap:jrefec:v:47:y:2013:i:3:p:391-415
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=102945

Keywords: Bankruptcy exemptions; Foreclosure laws; Mortgage defaults; Foreclosures;

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