Foreclosing on opportunity: State laws and mortgage credit

• 成果类型: Article
• 署名作者: Pence, KM
• 署名单位: Federal Reserve System - USA
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/rest.2006.88.1.177
• 发表日期: 2006-02
• 页码: 177-182
• 关键词: home; bankruptcy; MARKET

摘要

Foreclosure laws govern the rights of borrowers and lenders when borrowers default on mortgages. In states with laws favoring the borrower, the supply of mortgage credit may decrease because lenders face higher costs. To examine the laws' effects, I compare approved mortgage applications in census tracts that border each other but are located in different states. Using a regression-discontinuity design and semiparametric estimation methods, I find that loan sizes are 3% to 7% smaller in defaulter-friendly states; this result suggests that defaulter-friendly laws impose material costs on borrowers at the time of loan origination.