Credit counseling and mortgage termination by low-income households

Claudio Gonzalez-Vega and Valentina Hartarska ()

No 963, Proceedings from Federal Reserve Bank of Chicago

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.

Keywords: Mortgage loans; Credit control (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Published in Proceedings of a conference held in Washington, DC. (2005 : April 7-8) : a Federal Reserve System Community Affairs Reseach Conference; Promises & Pitfalls: as Consumer Finance Options Multiply, Who Is Being Served and at What Cost?

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Credit Counseling and Mortgage Termination by Low-Income Households (2005)
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:fedhpr:963

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Proceedings from Federal Reserve Bank of Chicago Contact information at EDIRC.
Bibliographic data for series maintained by Lauren Wiese ().