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State mortgage foreclosure policies and lender interventions: Impacts on borrower behavior in default


  • J. Michael Collins
  • Ken Lam
  • Christopher E. Herbert


Due to the rise in foreclosure filings, policymakers are increasingly concerned with helping families in financial distress keep their homes. This paper tests the extent to which distressed mortgage borrowers benefit from three types of state foreclosure polices: (1) judicial foreclosure proceedings, (2) statutory rights of redemption, and (3) statewide foreclosure‐prevention initiatives. Based on an analysis of borrowers in default who reside in 22 cross‐state metropolitan statistical area pairs, state policies generally have weak effects. Both judicial foreclosure proceedings and foreclosure prevention initiatives are associated with modest increases in loan modification rates. Using a matching procedure, a lender's letter promoting mortgage default counseling was associated with increases in loan modifications, decreases in loan cures, and decreases in foreclosure starts. The effects of the letter were also stronger in states with judicial proceedings. © 2011 by the Association for Public Policy Analysis and Management.

Suggested Citation

  • J. Michael Collins & Ken Lam & Christopher E. Herbert, 2011. "State mortgage foreclosure policies and lender interventions: Impacts on borrower behavior in default," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(2), pages 216-232, March.
  • Handle: RePEc:wly:jpamgt:v:30:y:2011:i:2:p:216-232

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    Cited by:

    1. Bruce Gordon & Daniel Winkler, 2015. "Statutory Right of Redemption and the Selling Price of Foreclosed Houses," The Journal of Real Estate Finance and Economics, Springer, vol. 51(3), pages 365-397, October.
    2. repec:oup:indcch:v:25:y:2016:i:6:p:955-975. is not listed on IDEAS
    3. Gerardi, Kristopher & Lambie-Hanson, Lauren & Willen, Paul S., 2013. "Do borrower rights improve borrower outcomes? Evidence from the foreclosure process," Journal of Urban Economics, Elsevier, vol. 73(1), pages 1-17.
    4. Lawrence R. Cordell & Liang Geng & Laurie Goodman & Lidan Yang, 2013. "The cost of delay," Working Papers 13-15, Federal Reserve Bank of Philadelphia.
    5. Sergio Afcha & Jose García-Quevedo, 2016. "The impact of R&D subsidies on R&D employment composition," Industrial and Corporate Change, Oxford University Press, vol. 25(6), pages 955-975.
    6. International Monetary Fund, 2015. "IMF Multi-Country Report; Housing Recoveries: Cluster Report on Denmark, Ireland, Kingdom of the Netherlands—the Netherlands, and Spain," IMF Staff Country Reports 15/1, International Monetary Fund.
    7. repec:kap:poprpr:v:36:y:2017:i:4:d:10.1007_s11113-017-9429-1 is not listed on IDEAS
    8. Tsai, Ming Shann & Chiang, Shu Ling & Miller, Chen, 2016. "A study on the distribution of the foreclosure lag, its expected capital opportunity cost and its analyses," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 45(C), pages 156-170.
    9. Olsen, Edgar O. & Zabel, Jeffrey E., 2015. "US Housing Policy," Handbook of Regional and Urban Economics, Elsevier.
    10. Jochen R. Andritzky, 2014. "Resolving Residential Mortgage Distress; Time to Modify?," IMF Working Papers 14/226, International Monetary Fund.
    11. Russell, Blair D. & Moulton, Stephanie & Greenbaum, Robert T., 2014. "Take-up of mortgage assistance for distressed homeowners: The role of geographic accessibility," Journal of Housing Economics, Elsevier, vol. 24(C), pages 57-74.

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