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When does delinquency result in neglect?: mortgage delinquency and property maintenance

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  • Lauren Lambie-Hanson

Abstract

Studies of foreclosure externalities have overwhelmingly focused on the impact of forced sales on the value of nearby properties, typically finding modest evidence of foreclosure spillovers. However, many quality-of-life issues posed by foreclosures may not be reflected in nearby sale prices. This paper uses new data from Boston on constituent complaints and requests for public services made to City government departments, matched with loan-level data, to examine the timing of foreclosure externalities. I find evidence that property conditions suffer most while homes are bank owned, although reduced maintenance is also common earlier in the foreclosure process. Since short sales prevent bank ownership, they should result in fewer neighborhood disamenities than foreclosures.

Suggested Citation

  • Lauren Lambie-Hanson, 2013. "When does delinquency result in neglect?: mortgage delinquency and property maintenance," Public Policy Discussion Paper 13-1, Federal Reserve Bank of Boston.
  • Handle: RePEc:fip:fedbpp:13-1
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    References listed on IDEAS

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    1. Andrew F. Haughwout & Richard Peach & Joseph Tracy, 2010. "The homeownership gap," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 16(May).
    2. Kristopher S. Gerardi & Eric Rosenblatt & Paul S. Willen & Vincent W. Yao, 2012. "Foreclosure externalities: some new evidence," Public Policy Discussion Paper 12-5, Federal Reserve Bank of Boston.
    3. Schuetz, Jenny & Been, Vicki & Ellen, Ingrid Gould, 2008. "Neighborhood effects of concentrated mortgage foreclosures," Journal of Housing Economics, Elsevier, vol. 17(4), pages 306-319, December.
    4. Haughwout, Andrew & Peach, Richard & Tracy, Joseph, 2008. "Juvenile delinquent mortgages: Bad credit or bad economy?," Journal of Urban Economics, Elsevier, vol. 64(2), pages 246-257, September.
    5. John Y. Campbell & Stefano Giglio & Parag Pathak, 2011. "Forced Sales and House Prices," American Economic Review, American Economic Association, vol. 101(5), pages 2108-2131, August.
    6. Nasser Daneshvary & Terrence M. Clauretie & Ahmad Kader, 2011. "Short-Term Own-Price and Spillover Effects of Distressed Residential Properties: The Case of a Housing Crash," Journal of Real Estate Research, American Real Estate Society, vol. 33(2), pages 179-208.
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    Cited by:

    1. Jaclene Begley & Lauren Lambie-Hanson, 2015. "The Home Maintenance and Improvement Behaviors of Older Adults in Boston," Housing Policy Debate, Taylor & Francis Journals, vol. 25(4), pages 754-781, October.

    More about this item

    Keywords

    Foreclosure - Massachusetts ; Real property - Massachusetts ; Housing - Prices - Massachusetts;

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