Foreclosure delay and consumer credit performance

Paul S. Calem, Julapa Jagtiani and William Lang

No 15-24, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Supersedes Working Paper 14-8. The deep housing market recession from 2008 through 2010 was characterized by a steep rise in the number of foreclosures and lengthening foreclosure timelines. The average length of time from the onset of delinquency through the end of the foreclosure process also expanded significantly, averaging up to three years in some states. Most individuals undergoing foreclosure were experiencing serious financial stress. However, the extended foreclosure timelines enabled mortgage defaulters to live in their homes without making mortgage payments until the end of the foreclosure process, thus providing temporary income and liquidity benefits from lower housing costs. This paper investigates the impact of extended foreclosure timelines on borrower performance with credit card debt. Our results indicate that a longer period of nonpayment of mortgage expenses results in higher cure rates on delinquent credit cards and reduced credit card balances. Foreclosure process delays may have mitigated the impact of the economic downturn on credit card default.

Keywords: Mortgage default; Foreclosure; Foreclosure delay; Credit card Default (search for similar items in EconPapers)
JEL-codes: G02 G21 G28 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2015-07-02
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.philadelphiafed.org/-/media/frbp/asset ... rs/2015/wp15-24r.pdf (application/pdf)

Related works:
Journal Article: Foreclosure Delay and Consumer Credit Performance (2017)
Working Paper: Foreclosure delay and consumer credit performance (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedpwp:15-24

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Philadelphia Contact information at EDIRC.
Bibliographic data for series maintained by Beth Paul ().