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Author: Qianqian Cao Publisher: ISBN: Category : Languages : en Pages : 39
Book Description
State foreclosure and bankruptcy laws govern the rights of mortgage lenders and borrowers during foreclosure and bankruptcy proceedings and thereby affect lenders' exposure to credit risk. This paper seeks to understand the impact of these laws on the types of mortgages originated. The empirical identification is based on state-level variations in foreclosure and bankruptcy laws and a border estimation strategy. We find that higher-risk loans (FHA and subprime loans) are more likely to be originated in states with lender-friendly foreclosure laws. Also, higher-risk loans are less likely to be originated in states with a more generous bankruptcy homestead exemption. In addition, our results are consistent with the idea that FHA and subprime loans share a similar clientele and are close substitutes. These results are robust without the ordering assumption among conventional prime, FHA and subprime loans.
Author: Qianqian Cao Publisher: ISBN: Category : Languages : en Pages : 39
Book Description
State foreclosure and bankruptcy laws govern the rights of mortgage lenders and borrowers during foreclosure and bankruptcy proceedings and thereby affect lenders' exposure to credit risk. This paper seeks to understand the impact of these laws on the types of mortgages originated. The empirical identification is based on state-level variations in foreclosure and bankruptcy laws and a border estimation strategy. We find that higher-risk loans (FHA and subprime loans) are more likely to be originated in states with lender-friendly foreclosure laws. Also, higher-risk loans are less likely to be originated in states with a more generous bankruptcy homestead exemption. In addition, our results are consistent with the idea that FHA and subprime loans share a similar clientele and are close substitutes. These results are robust without the ordering assumption among conventional prime, FHA and subprime loans.
Author: Jihad Dagher Publisher: International Monetary Fund ISBN: 1484381629 Category : Business & Economics Languages : en Pages : 33
Book Description
Laws governing the foreclosure process can have direct consequences on the costs of foreclosure and could therefore affect lending decisions. We exploit the heterogeneity in the judicial requirements across U.S. states to examine their impact on banks’ lending decisions in a sample of urban areas straddling state borders. A key feature of our study is the way it exploits an exogenous cutoff in loan eligibility to GSE guarantees which shift the burden of foreclosure costs onto the GSEs. We find that judicial requirements reduce the supply of credit only for jumbo loans that are ineligible for GSE guarantees. These laws do not affect, however, the relative demand of jumbo loans. Our findings, which also hold using novel nonbinary measures of judicial requirements, illustrate the consequences of foreclosure laws on the supply of mortgage credit. They also shed light on a significant indirect cross-subsidy by the GSEs to borrower-friendly states that has been overlooked thus far.
Author: United States. Congress. House. Committee on the Judiciary. Subcommittee on Commercial and Administrative Law Publisher: ISBN: Category : Business & Economics Languages : en Pages : 192
Author: United States. Congress. Senate. Committee on the Judiciary. Subcommittee on Administrative Oversight and the Courts Publisher: ISBN: Category : Bankruptcy Languages : en Pages : 184
Author: Chintal A. Desai Publisher: ISBN: Category : Languages : en Pages :
Book Description
This study analyzes the effects of state bankruptcy asset exemptions and foreclosure laws on mortgage default and foreclosure rates across different segments of the mortgage market. We found that the effects of these legal provisions are larger for sub-prime than for prime mortgages and larger for adjustable rate mortgages than for fixed rate mortgages. These results demonstrate that the effects of variation in bankruptcy exemptions and foreclosure laws is most pronounced in the most risky segments of the mortgage market, which are those that have been most affected by the continuing housing slump in the United States.
Author: Daniel Immergluck Publisher: Cornell University Press ISBN: 080145882X Category : Social Science Languages : en Pages : 265
Book Description
Over the last two years, the United States has observed, with some horror, the explosion and collapse of entire segments of the housing market, especially those driven by subprime and alternative or "exotic" home mortgage lending. The unfortunately timely Foreclosed explains the rise of high-risk lending and why these newer types of loans—and their associated regulatory infrastructure—failed in substantial ways. Dan Immergluck narrates the boom in subprime and exotic loans, recounting how financial innovations and deregulation facilitated excessive risk-taking, and how these loans have harmed different populations and communities. Immergluck, who has been working, researching, and writing on issues tied to housing finance and neighborhood change for almost twenty years, has an intimate knowledge of the promotion of homeownership and the history of mortgages in the United States. The changes to the mortgage market over the past fifteen years—including the securitization of mortgages and the failure of regulators to maintain control over a much riskier array of mortgage products—led, he finds, inexorably to the current crisis. After describing the development of generally stable and risk-limiting mortgage markets throughout much of the twentieth century, Foreclosed details how federal policy-makers failed to regulate the new high-risk lending markets that arose in the late 1990s and early 2000s. The book also examines federal, state, and local efforts to deal with the mortgage and foreclosure crisis of 2007 and 2008. Immergluck draws upon his wealth of experience to provide an overarching set of principles and a detailed set of policy recommendations for "righting the ship" of U.S. housing finance in ways that will promote affordable yet sustainable homeownership as an option for a broad set of households and communities.
Author: Cem Demiroglu Publisher: ISBN: Category : Languages : en Pages :
Book Description
This paper examines how differences in state foreclosure laws influence the incidence of default in the residential mortgage market. Specifically, we examine how judicial review requirements, lenders' recourse rights (deficiency judgments), and state assistance programs for distressed borrowers affect the likelihood of default during the recent US housing crisis. We argue that state foreclosure laws should have little effect on the likelihood of liquidity events (for example, shocks to borrowers' ability to make payments) and thus provide a good instrument for identifying the borrower's costs of default. We find that borrowers with negative home equity are significantly more likely to default in states with borrower-friendly foreclosure laws. Moreover, we find that foreclosure laws that are positively correlated with default are also negatively correlated with personal bankruptcy, which supports the view that foreclosure laws are instruments for costs of default and not merely proxies for unobserved income shocks. Finally, we examine how recent state and federal loan foreclosure prevention programs have affected the likelihood of default. Overall, we find a significant decline in the effect of judicial review requirements but not deficiency judgments on default after 2008.
Author: Daxuan Zhao Publisher: ISBN: Category : Languages : en Pages :
Book Description
This paper measures the impact of three types of defaulter-friendly foreclosure laws on the behaviors of mortgage lenders in loan origination, and borrowers in default decision. To disentangle the "pure" influence of foreclosure laws from that of unobserved regional factors, we use the border identification strategy to sort the loan sample in the zip codes on both sides of a border dividing states by the foreclosure laws adopted. Unlike the previous research, we find no conclusive evidence on the causal effects of foreclosure laws on loan supply and default risk. The empirical results are highly sensitive to fixed effect specifications, time period, and sample selection.
Author: Qianqian Cao
Author: Qianqian Cao
Author: Jihad Dagher
Author: United States. Congress. House. Committee on the Judiciary. Subcommittee on Commercial and Administrative Law
Author: United States. Congress. Senate. Committee on the Judiciary. Subcommittee on Administrative Oversight and the Courts
Author: United States. Congress. Senate. Committee on the Judiciary
Author: Chintal A. Desai
Author: Daniel Immergluck
Author: Karen M. Pence
Author: Cem Demiroglu
Author: Daxuan Zhao