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Paul S Willen - One of the best experts on this subject based on the ideXlab platform.
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mortgage default research and the recent Foreclosure crisis
Review of Financial Economics, 2018Co-Authors: Christopher L Foote, Paul S WillenAbstract:This paper reviews recent research on mortgage default, focusing on the relationship of this research to the recent Foreclosure crisis. Research on defaults was advanced both theoretically and empirically by the time the crisis began, but economists have moved the frontier further by improving data sources, building dynamic optimizing models of default, and explicitly addressing reverse causality between rising Foreclosures and falling house prices. Mortgage defaults were also a key component of early research that pointed to subprime and other privately securitized mortgages as fundamental drivers of the housing boom, although this research has been criticized recently. Going forward, improvements to data and models will allow researchers to explore the central unsolved question in this area: why mortgage default is so rare, even for households with high levels of negative equity or financial distress.
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the role of proximity in Foreclosure externalities evidence from condominiums
American Economic Journal: Economic Policy, 2015Co-Authors: Lynn M Fisher, Lauren Lambiehanson, Paul S WillenAbstract:We measure the effect of Foreclosures on the sale prices of nearby properties using a dataset of condominiums in Boston. A Foreclosure in the same association and at the same address depresses the sale price by 2.5 percent, but properties in the same association but located at a different address have an effect that is tightly estimated at zero. Since properties in the same association are close substitutes, we argue that the evidence points against the pecuniary externality of property coming on the market and toward a physical externality as the source of measured Foreclosure externalities. (JEL R31)
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the role of proximity in Foreclosure externalities evidence from condominiums
National Bureau of Economic Research, 2014Co-Authors: Lynn M Fisher, Lauren Lambiehanson, Paul S WillenAbstract:We measure the effect of Foreclosures on the sale prices of nearby properties using a dataset of condominiums in Boston. A Foreclosure in the same association and at the same address depresses the sale price by 2.5 percent, but properties in the same association but located at a different address have an effect that is tightly estimated at zero. Since properties in the same association are close substitutes, we argue that the evidence points against the pecuniary externality of property coming on the market and toward a physical externality as the source of measured Foreclosure externalities.
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do borrower rights improve borrower outcomes evidence from the Foreclosure process
Journal of Urban Economics, 2013Co-Authors: Kristopher S Gerardi, Lauren Lambiehanson, Paul S WillenAbstract:We evaluate the effects of laws designed to protect borrowers from Foreclosure. We find that these laws delay but do not prevent Foreclosures. We first compare states that require lenders to seek judicial permission to foreclose with states that do not. Borrowers in judicial states are no more likely to cure and no more likely to renegotiate their loans, but the delays lead to a build-up in these states of persistently delinquent borrowers, the vast majority of whom eventually lose their homes. We next analyze a “right-to-cure” law instituted in Massachusetts on May 1, 2008. Using a difference-in-differences approach to evaluate the effect of the policy, we compare Massachusetts with neighboring states that did not adopt similar laws. We find that the right-to-cure law lengthens the Foreclosure timeline but does not lead to better outcomes for borrowers.
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Foreclosure externalities some new evidence
National Bureau of Economic Research, 2012Co-Authors: Kristopher S Gerardi, Paul S Willen, Eric Rosenblatt, Vincent W YaoAbstract:In a recent set of influential papers, researchers have argued that residential mortgage Foreclosures reduce the sale prices of nearby properties. We revisit this issue using a more robust identification strategy combined with new data that contain information on the location of properties secured by seriously delinquent mortgages and information on the condition of foreclosed properties. We find that while properties in virtually all stages of distress have statistically significant, negative effects on nearby home values, the magnitudes are economically small, peak before the distressed properties complete the Foreclosure process, and go to zero about a year after the bank sells the property to a new homeowner. The estimates are very sensitive to the condition of the distressed property, with a positive correlation existing between house price growth and foreclosed properties identified as being in "above average" condition. We argue that the most plausible explanation for these results is an externality resulting from reduced investment by owners of distressed property. Our analysis shows that policies that slow the transition from delinquency to Foreclosure likely exacerbate the negative effect of mortgage distress on house prices.
Dan Immergluck - One of the best experts on this subject based on the ideXlab platform.
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too little too late and too timid the federal response to the Foreclosure crisis at the five year mark
Housing Policy Debate, 2013Co-Authors: Dan ImmergluckAbstract:The primary federal policy responses to the Foreclosure crisis, thus far, include programs to reduce Foreclosures and efforts to mitigate the impacts of Foreclosures on communities. This paper reviews policy responses between 2007 and 2012. While there is less information at this point on the outcomes of mitigation polices, the overall federal response is thus far lacking. The programs pale in comparison with the challenges they are intended to solve and suffer from other program design and implementation problems. Foreclosure prevention efforts, in particular, are faulted for being too reliant on marginal incentive payments, for failing to include a key policy, bankruptcy modification, which would have encouraged lenders to modify loans more aggressively, and for not sanctioning servicers more aggressively for poor performance and/or noncompliance. The overall federal response is also characterized as moving too slowly in some cases and being too captive to the policy preferences of the financial services industry.
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Legislative Responses to the Foreclosure Crisis in Nonjudicial States
SSRN Electronic Journal, 2011Co-Authors: Dan Immergluck, Frank S. Alexander, Katie Balthrop, Philip Schaeffing, Jesse ClarkAbstract:The context for Foreclosure prevention and mitigation hinges critically upon whether a state operates in a judicial or nonjudicial regime. Nonjudicial Foreclosure regimes allow mortgage lenders to foreclose on homes without substantial court supervision. In these states, the time from the borrower receiving an initial notice of Foreclosure to the date of the completed Foreclosure sale tends to be substantially shorter than in states with judicial Foreclosure systems. Moreover, nonjudicial Foreclosure regimes tend to offer borrowers fewer legal protections and make it more difficult for homeowners to slow or intervene in the routine Foreclosure process. For example, many of the more well-known efforts to reduce Foreclosures, including mediation programs in which lenders must meet with borrowers in the presence of a mediator, have occurred in judicial states. This report examines legislation affecting the mortgage Foreclosure process adopted in states with nonjudicial Foreclosure processes from January 2005 through May of 2010. Little is known about how policymakers in nonjudicial states have responded to the Foreclosure crisis. In general, borrowers in nonjudicial states are at a significant disadvantage when compared to those in judicial states and, short of changing to a judicial Foreclosure regime, efforts to reduce Foreclosures run up against a different set of constraints and challenges. The primary purpose of this report is to understand how policymakers in nonjudicial states have attempted to respond in terms of legislative modifications to the Foreclosure process in the face of the national Foreclosure crisis. We do this by analyzing state legislative activity during the study period. In particular we identified all legislation enacted during this period that concerns the regulation and administration of the default and Foreclosure process for single-family residential mortgages. We quantify and classify this legislation, and identify states that were relatively active in this area during the study period. We then focus on eight of the most active states, describing some of the key provisions adopted in these states.
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the local wreckage of global capital the subprime crisis federal policy and high Foreclosure neighborhoods in the us
International Journal of Urban and Regional Research, 2011Co-Authors: Dan ImmergluckAbstract:The article discusses the U.S. financial crisis, referred to as the U.S. subprime crisis, and Foreclosure rates in U.S. neighborhoods. The author describes the origins of the crisis and the evolution of home Foreclosures that followed. The author also discusses the so-called Neighborhood Stabilization Program, the U.S. federal government response to the Foreclosure problem. The article attributes the U.S. subprime crisis to a direct link that existed between global capital markets and homeowners and a lack of oversight and restraint in the public sector.
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the Foreclosure crisis foreclosed properties and federal policy some implications for housing and community development planning
Journal of The American Planning Association, 2009Co-Authors: Dan ImmergluckAbstract:Problem: Foreclosures surged during the 2007 to 2009 national Foreclosure crisis and federal policymakers failed to respond quickly and forcefully to the problem. The large numbers and geographic concentration of foreclosed properties have posed a particular problem for many planners. Purpose: I aim to describe the intrametropolitan distribution of foreclosed properties at the zip code level, the often anemic or delayed federal policy response to rising Foreclosures, and the potential effects of likely changes in federal policy and housing finance for metropolitan housing, development patterns, and local housing and community development planning. Methods: I used archival research and secondary and media resources to document the federal response to the Foreclosure crisis. I analyzed a proprietary data set to describe the problem of the accumulation of foreclosed properties across and within metropolitan areas. Results and conclusions: Foreclosed properties were already accumulating in metropolitan areas ...
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The external costs of Foreclosure: The impact of single‐family mortgage Foreclosures on property values
Housing Policy Debate, 2006Co-Authors: Dan Immergluck, Geoff SmithAbstract:To measure the impact of Foreclosures on nearby property values, we use a database that combines data on 1997 and 1998 Foreclosures with data on neighborhood characteristics and more than 9,600 single-family property transactions in Chicago in 1999. After controlling for some 40 characteristics of properties and their respective neighborhoods, we find that Foreclosures of conventional single-family (one- to four-unit) loans have a significant impact on nearby property values. Our most conservative estimates indicate that each conventional Foreclosure within an eighth of a mile of a single-family home results in a decline of 0.9 percent in value. Cumulatively, this means that, for the entire city of Chicago, the 3,750 Foreclosures that occurred in 1997 and 1998 are estimated to have reduced nearby property values by more than $598 million, for an average of $159,000 per Foreclosure. This does not include effects on the value of condominiums, multifamily rental properties, and commercial buildings.
Michael Ohlrogge - One of the best experts on this subject based on the ideXlab platform.
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Foreclosure spillovers and individual well being evidence from the great recession
Social Science Research Network, 2019Co-Authors: Christos Makridis, Michael OhlroggeAbstract:Abstract This paper explores the causal effect of Foreclosure on individual well-being and social capital. Using plausibly exogenous variation in the timing of interest rate changes on different types of adjustable rate mortgages (ARMs), we find that a 10% rise in Foreclosures is associated with a 0.58% and 0.28% decline in current and expected future life satisfaction. These effects are primarily driven by the effects on local optimism and social capital. The results are consistent with models of spatial externalities where large-scale shocks generate adverse effects on communities, not just individuals.
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The Local Effects of Foreclosures
SSRN Electronic Journal, 2017Co-Authors: Christos Makridis, Michael OhlroggeAbstract:We exploit the staggered and discontinuous changes in interest rates among adjustable rate mortgages to identify the effects of Foreclosures independently of housing prices. First, interest rate resets predict Foreclosure, accounting for up to 18% of the change in Foreclosures. Second, a 10% rise in Foreclosures is associated with a 1.14% and 2.57% decline in non-tradables employment and hiring, respectively, accounting for up to 10% of the decline in the hiring rate between 2006-2011. Third, we introduce a new mechanism independent of housing prices whereby Foreclosures reduce local optimism and raise uncertainty, thereby leading to a contraction of credit that affects hiring, especially small businesses.
Andra C Ghent - One of the best experts on this subject based on the ideXlab platform.
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securitization and mortgage renegotiation evidence from the great depression
Review of Financial Studies, 2011Co-Authors: Andra C GhentAbstract:We use loan-level data from the New York City metropolitan area to examine the extent to which lenders attempted to prevent Foreclosures with concessionary modifications during the Great Depression. We find no principal forgiveness in the sample and only a handful of concessionary mortgage modifications of other types. Far more mortgages terminated through Foreclosure than received any sort of concessionary modification. The results indicate that there are significant impediments to renegotiation of residential mortgages beyond securitization. As such, less renegotiation seems unlikely to be a major cost of securitization of residential mortgages. The Author 2011. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.
Jose Tapia A Granados - One of the best experts on this subject based on the ideXlab platform.
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abstract p309 Foreclosure rates during economic recession and cardiovascular health paradoxical results from the survey of the health of wisconsin
Circulation, 2014Co-Authors: Javier F Nieto, Kristen Malecki, Jose Tapia A GranadosAbstract:Contrary to conventional wisdom, research has shown that economic recessions are associated with decreases in mortality and, conversely, mortality increases during times of economic expansion. Most of these studies are based on unemployment data and few have examined morbidity data as outcomes. The present analyses used data from the 2008-11 waves of the Survey of the Health of Wisconsin (SHOW) to study the association between county rates of Foreclosures during the 2009-10 economic recession and cardiovascular health. SHOW is based on a probabilistic statewide sample of adult (21-74 years old, n = 1,643) residents in Wisconsin. The cardiovascular health (CVH) index was defined using a combination of “ideal or intermediate” levels of seven risk factors and health behaviors (body mass index, cholesterol, glucose, diet, physical activity, blood pressure and smoking). Foreclosure rates for the 72 counties of Wisconsin were obtained from commercially available data for the period 2000-2012. Other covariates i...
