PropertyProf Blog

Editor: Stephen Clowney
Univ. of Arkansas, Fayetteville

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Wednesday, September 21, 2011

Chan, Gedal, Been & Haughwout on What Happens to Distressed Mortgage Borrowers and Their Homes?

Sewin Chan (NYU - Public Service), Michael Gedal (NYU - Public Service), Vicki Been (NYU) and Andrew Haughwout (Federal Reserve Bank) have posted Pathways after Default: What Happens to Distressed Mortgage Borrowers and Their Homes? on SSRN.  Here's the abstract:

We use a detailed dataset of seriously delinquent mortgages to examine the dynamic process of mortgage default – from initial delinquency and default to final resolution of the loan and disposition of the property. We estimate a two-stage competing risk hazard model to assess the factors associated with whether a borrower behind on mortgage payments receives a legal notice of foreclosure, and with what ultimately happens to the borrower and property. In particular, we focus on a borrower’s ability to avoid a foreclosure auction by getting a modification, by refinancing the loan, or by selling the property. We find that the outcomes of the foreclosure process are significantly related to: the terms of the loan; the borrower’s credit history; current loan-to-value and the presence of a junior lien; the borrower’s post-default payment behavior; the borrower’s participation in foreclosure counseling; neighborhood characteristics such as foreclosure rates, recent house price depreciation and median income; and the borrower’s race and ethnicity.

Steve Clowney

http://lawprofessors.typepad.com/property/2011/09/chan-gedal-been-haughwout-on-what-happens-to-distressed-mortgage-borrowers-and-their-homes.html

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