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The Value of Foreclosed Property – House Prices, Foreclosure Laws, and Appraisals

Author

Listed:
  • Anthony Pennington-Cross

    (Office of Federal Housing Enterprise Oversight)

Abstract

This paper estimates the discount at which foreclosed properties sell relative to the market price or average price as reflected in housing indices such as the repeat sales 3 housing price indices. Repeat sales indices focus on the average growth of prices holding quality constant. In addition, this paper discusses how to bridge the gap between the average price for a cohort of properties and the price for foreclosed properties. Beyond the impact of legal costs, this paper looks for evidence that borrower and loan characteristics provide information on the value of foreclosed property.

Suggested Citation

  • Anthony Pennington-Cross, 2004. "The Value of Foreclosed Property – House Prices, Foreclosure Laws, and Appraisals," FHFA Staff Working Papers 04-01, Federal Housing Finance Agency.
    • Handle: RePEc:hfa:wpaper:04-01
    as

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    File URL: https://www.fhfa.gov/sites/default/files/2023-04/2004-01_WorkingPaper_04-1_N508.pdf
    Download Restriction: no
    File URL: https://www.fhfa.gov/research/papers/wp0401
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    References listed on IDEAS

    as
    1. Clauretie, Terrence M & Herzog, Thomas N, 1990. "The Effect of State Foreclosure Laws on Loan Losses: Evidence from the Mortgage Insurance Industry," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 22(2), pages 221-233, May.
    2. Pennington-Cross, Anthony, 2003. "Credit History and the Performance of Prime and Nonprime Mortgages," The Journal of Real Estate Finance and Economics, Springer, vol. 27(3), pages 279-301, November.
    3. Gordon W. Crawford & Eric Rosenblatt, 1995. "Efficient Mortgage Default Option Exercise: Evidence from Loss Severity," Journal of Real Estate Research, American Real Estate Society, vol. 10(5), pages 543-556.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Dirk Krueger & Karsten Jeske, 2004. "Housing and the Macroeconomy: The Role of Implicit Guarantees for Government Sponsored Enterprises," 2004 Meeting Papers 100, Society for Economic Dynamics.
    2. Theresa Kuchler & Johannes Stroebel, 2009. "Foreclosure and Bankruptcy--Policy Conclusions from the Current Crisis," Discussion Papers 08-037, Stanford Institute for Economic Policy Research.
    3. Das, Sanjiv R. & Meadows, Ray, 2013. "Strategic loan modification: An options-based response to strategic default," Journal of Banking & Finance, Elsevier, vol. 37(2), pages 636-647.

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