The Financial Stakes in Due‐On‐Sale: The Case of California's State‐Chartered Savings and Loans

Larry Ozanne

Real Estate Economics, 1984, vol. 12, issue 4, 473-494

Abstract: On August 25, 1978 the California Supreme Court ruled that enforcement of due‐on‐sale clauses unduly restricts the right of homeowners to sell their homes. On June 28, 1982, the U.S. Supreme Court ruled that the Federal Home Loan Bank Board could permit due‐on‐sale enforcement because such enforcement was important to the financial stability of savings and loans. Both courts' decisions, though contrary in their effect on the clause, are based on the economic importance of the clause. Just how important is the clause? This paper calculates how much money the 1978 California decision (Wellenkamp) transferred from affected savings and loans to homebuyers. The yearly transfer by 1981 is estimated at between $58 and $170 million. For the lenders, this amounts to between a tenth and a quarter of total 1981 losses. For affected homebuyers, the savings average 25% of mortgage interest payments. On the basis of these calculations, both courts are correct about the importance of the clause.

Date: 1984
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/1540-6229.00334

Related works:
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:bla:reesec:v:12:y:1984:i:4:p:473-494

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1080-8620

Access Statistics for this article

Real Estate Economics is currently edited by Crocker Liu, N. Edward Coulson and Walter Torous

More articles in Real Estate Economics from American Real Estate and Urban Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().