A Crisis of Missed Opportunities? Foreclosure Costs and Mortgage Modification During the Great Recession

• 成果类型: Article
• 署名作者: Gabriel, Stuart; Iacoviello, Matteo; Lutz, Chandler
• 署名单位: University of California System; University of California Los Angeles; Federal Reserve System - USA; Federal Reserve System Board of Governors; U.S. Securities & Exchange Commission (SEC)
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa059
• 发表日期: 2021
• 页码: 864
• 关键词: INTERVENTION; externalities; search; state

摘要

We investigate the impact of Great Recession policies in California that substantially increased lender pecuniary and time costs of foreclosure. We estimate that the California Foreclosure Prevention Laws (CFPLs) prevented 250,000 California foreclosures (a 20% reduction) and created $300 billion in housing wealth. The CFPLs boosted mortgage modifications and reduced borrower transitions into default. They also mitigated foreclosure externalities via increased maintenance spending on homes that entered foreclosure. The CFPLs had minimal adverse side effects on the availability of mortgage credit for new borrowers. Altogether, findings suggest that policy interventions that keep borrowers in their homes may be broadly beneficial during times of widespread housing distress.