IDEAS home Printed from https://ideas.repec.org/p/fip/fedhpr/963.html
   My bibliography  Save this paper

Credit counseling and mortgage termination by low-income households

Author

Listed:
  • Claudio Gonzalez-Vega
  • Valentina Hartarska

Abstract

Published research on credit counseling and mortgage termination is surprisingly scarce, despite substantial growth in this industry. While the purpose of counseling is to assist low-income borrowers to improve their handling of debt and thereby reduce default, counseling may also improve the borrowers? understanding of their financial position and thus induce optimal mortgage termination. Using a competing-risks framework, we study the effects on default and prepayment of a counseling program implemented in several Midwest states. We find weak evidence of that the default hazard was lower for graduates of the counseling program, but that their default behavior was more optimal. The prepayment hazard was higher for counseled borrowers, but their prepayment behavior was not more optimal. Overall, counseling seems to affect the lenders? profits, but the net effect should be evaluated both in terms of prepayment and default.

Suggested Citation

  • Claudio Gonzalez-Vega & Valentina Hartarska, 2005. "Credit counseling and mortgage termination by low-income households," Proceedings 963, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhpr:963
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Theodos, Brett & Stacy, Christina Plerhoples & Daniels, Rebecca, 2018. "Client led coaching: A random assignment evaluation of the impacts of financial coaching programs," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 140-158.
    2. Denis Nadolnyak & Valentina Hartarska & Xuan Shen, 2016. "Climate Variability and Agricultural Loan Delinquency in the US," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(12), pages 238-249, December.
    3. Entorf, Horst & Hou, Jia, 2018. "Financial Education for the Disadvantaged? A Review," IZA Discussion Papers 11515, Institute of Labor Economics (IZA).
    4. Tim Kaiser & Lukas Menkhoff, 2017. "Does Financial Education Impact Financial Literacy and Financial Behavior, and If So, When?," The World Bank Economic Review, World Bank, vol. 31(3), pages 611-630.
    5. Lin, Chaonan & Hsiao, Yu-Jen & Yeh, Cheng-Yung, 2017. "Financial literacy, financial advisors, and information sources on demand for life insurance," Pacific-Basin Finance Journal, Elsevier, vol. 43(C), pages 218-237.
    6. Shen, Chung-Hua & Lin, Shih-Jie & Tang, De-Piao & Hsiao, Yu-Jen, 2016. "The relationship between financial disputes and financial literacy," Pacific-Basin Finance Journal, Elsevier, vol. 36(C), pages 46-65.
    7. John M. Barron & Michael E. Staten, 2011. "Is technology-enhanced credit counseling as effective as in-person delivery?," Working Papers 11-11, Federal Reserve Bank of Philadelphia.

    More about this item

    Keywords

    Mortgage loans; Credit control;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedhpr:963. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lauren Wiese (email available below). General contact details of provider: https://edirc.repec.org/data/frbchus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.