Who enters the foreclosure process?

Eric Doviak and Sean MacDonald
Authors registered in the RePEc Author Service: Eryk Wdowiak

MPRA Paper from University Library of Munich, Germany

Abstract: Since February 2010, detailed information on every home mortgage default and foreclosure in New York State must be filed with the New York State Banking Department (NYSBD). The data enables us to identify the financial characteristics that make a defaulted borrower more (or less) likely to enter the foreclosure process. Our analysis of the NYSBD data suggests that borrowers in default who took larger loans are more likely to progress to foreclosure. It also suggests that reducing principal balances may reduce the foreclosure rate, but might have an adverse effect on the mortgage industry. Given the frequent criticism of the Home Affordable Modification Program (HAMP), it is no surprise that defaulted borrowers whose mortgages were modified via HAMP progress to a lis pendens filing a higher rate than defaulted borrowers without a modification or with a non-HAMP modification. After controlling for delinquency length (and other factors) however, we find that the HAMP program may have been effective in helping defaulted borrowers avoid foreclosure.

Keywords: mortgage; default; foreclosure (search for similar items in EconPapers)
JEL-codes: D14 G21 (search for similar items in EconPapers)
Date: 2011-10-01
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)

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https://mpra.ub.uni-muenchen.de/35359/1/MPRA_paper_35359.pdf revised version (application/pdf)

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