2006
DOI: 10.1162/003465306775565774
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Foreclosing on Opportunity: State Laws and Mortgage Credit

Abstract: Foreclosure laws govern the rights of borrowers and lenders when borrowers default on mortgages. Many states protect borrowers by imposing restrictions on the foreclosure process; these restrictions, in turn, impose large costs on lenders. Lenders may respond to these higher costs by reducing loan supply; borrowers may respond to the protections imbedded in these laws by demanding larger mortgages. I examine empirically the effect of the laws on equilibrium loan size. I exploit the rich geographic information … Show more

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Cited by 79 publications
(136 citation statements)
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“…While Deng et al (2000) and Calhoun and Deng (2002), studied the fixed and the adjustable mortgage rate, respectively FRMs and ARMs loans providing evidence that empirically, households non-payment and refinancing results seem to be strongly influenced by the moneyless of the relation options. As noted in Deng et al (2000), while the real options difficulty which is faced by households is a complicated one, the situation under which they should exercise their choices can often be quite easy to decide if the household can examine the market See Pafenberg (2005) Pence (2006), Cutts and Merrill (2008) and others have tested the importance of situation s 4 learn of mortgage markets. prices for their mortgage.…”
Section: Literature Reviewmentioning
confidence: 99%
“…While Deng et al (2000) and Calhoun and Deng (2002), studied the fixed and the adjustable mortgage rate, respectively FRMs and ARMs loans providing evidence that empirically, households non-payment and refinancing results seem to be strongly influenced by the moneyless of the relation options. As noted in Deng et al (2000), while the real options difficulty which is faced by households is a complicated one, the situation under which they should exercise their choices can often be quite easy to decide if the household can examine the market See Pafenberg (2005) Pence (2006), Cutts and Merrill (2008) and others have tested the importance of situation s 4 learn of mortgage markets. prices for their mortgage.…”
Section: Literature Reviewmentioning
confidence: 99%
“…We use the inverse hyperbolic sine transformation of household income and wealth to deal with zero and negative values. This transformation is otherwise very similar to log transformation for typical positive values (Pence, 2006). …”
Section: The Scf Analysismentioning
confidence: 87%
“…Baum-Snow & Marion (2009) estimate the impacts of low income housing subsidies on surrounding neighborhoods. Ferreira (2010) studies the impact of property taxes on residential mobility and Pence (2006) studies the impact of mortgage credit laws on loan size. In this sub-section we first discuss the bond referenda example that has been mentioned above in detail.…”
Section: Rd Examples In Urban Economicsmentioning
confidence: 99%