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Who Defaults on their Home Mortgage?

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  • Eric Doviak
  • Sean MacDonald

Abstract

Since Feb. 13, 2010, detailed information on every home mortgage default and foreclosure in New York State must be filed with the New York State Department of Financial Services (DFS). The data come from pre-foreclosure filing (PFF) notices that mortgage servicers must send to both the borrower and the DFS 90 days prior to initiating the foreclosure process and when a foreclosure has commenced. Pairing the PFF data with data on originations from the Home Mortgage Disclosure Act (HMDA) reveals the race and ethnicity of borrowers who defaulted on their home mortgages. HMDA analyses consistently reveal strong racial and ethnic disparities in lending practices. Our analysis shows that the same disparities reappear in the default data (i.e the PFF data), which suggests that lending disparities contributed to the higher default rates that we observe among black and Latino borrowers. Our analysis also suggests that labor market recovery would do the most to reduce the rate of mortgage default.

Suggested Citation

  • Eric Doviak & Sean MacDonald, 2012. "Who Defaults on their Home Mortgage?," New York Economic Review, New York State Economics Association (NYSEA), vol. 43(1), pages 75-98.
    • Handle: RePEc:nye:nyervw:v:43:y:2012:i:1:p:75-98
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    References listed on IDEAS

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    1. Lee C. Adkins, 2008. "Small Sample Performance of Instrumental Variables Probit Estimators: A Monte Carlo Investigation," Economics Working Paper Series 0807, Oklahoma State University, Department of Economics and Legal Studies in Business.
    2. Doviak, Eric & MacDonald, Sean, 2011. "Who enters the foreclosure process?," MPRA Paper 34276, University Library of Munich, Germany.
    3. Lee C. Adkins, 2009. "An Instrumental Variables Probit Estimator Using Gretl," EHUCHAPS, in: Ignacio Díaz-Emparanza & Petr Mariel & María Victoria Esteban (ed.), Econometrics with gretl. Proceedings of the gretl Conference 2009, edition 1, chapter 4, pages 59-74, Universidad del País Vasco - Facultad de Ciencias Económicas y Empresariales.
    4. Gerardi Kristopher & Willen Paul, 2009. "Subprime Mortgages, Foreclosures, and Urban Neighborhoods," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(3), pages 1-37, March.
    5. Elizabeth Laderman, 2001. "Subprime mortgage lending and the capital markets," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue dec28.
    6. Mark Doms & Frederick T. Furlong & John Krainer, 2007. "Subprime mortgage delinquency rates," Working Paper Series 2007-33, Federal Reserve Bank of San Francisco.
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    Cited by:

    1. Chan, Sewin & Gedal, Michael & Been, Vicki & Haughwout, Andrew, 2013. "The role of neighborhood characteristics in mortgage default risk: Evidence from New York City," Journal of Housing Economics, Elsevier, vol. 22(2), pages 100-118.
    2. Yusuf VARLI & Gökhan ÖVENÇ, 2019. "Dynamic Analysis of Defaults and Prepayments in the Turkish Mortgage Market," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(39).
    3. Kevin Bazer & Sílvio Rendon, 2021. "Individual and Local Effects of Unemployment on Mortgage Defaults," Working Papers 21-39, Federal Reserve Bank of Philadelphia.
    4. Doviak, Eric & MacDonald, Sean, 2011. "Who enters the foreclosure process?," MPRA Paper 34276, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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