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Who enters the foreclosure process?

Author

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  • Doviak, Eric
  • MacDonald, Sean

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.

Suggested Citation

  • Doviak, Eric & MacDonald, Sean, 2011. "Who enters the foreclosure process?," MPRA Paper 34276, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:34276
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    File URL: https://mpra.ub.uni-muenchen.de/35359/1/MPRA_paper_35359.pdf
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    References listed on IDEAS

    as
    1. Eric Doviak & Sean MacDonald, 2012. "Who Defaults on their Home Mortgage?," New York Economic Review, New York State Economics Association (NYSEA), vol. 43(1), pages 75-98.
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    Cited by:

    1. Eric Doviak & Sean MacDonald, 2012. "Who Defaults on their Home Mortgage?," New York Economic Review, New York State Economics Association (NYSEA), vol. 43(1), pages 75-98.
    2. John Y. Campbell, 2013. "Mortgage Market Design," Review of Finance, European Finance Association, vol. 17(1), pages 1-33.
    3. Emily S. Taylor Poppe, 2016. "Homeowner Representation in the Foreclosure Crisis," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 13(4), pages 809-836, December.

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    More about this item

    Keywords

    mortgage; default; foreclosure;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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