Residential mortgage default: Theory works and so does policy

What matters more for South African households’ debt repayment difficulties?

“…This seems to suggest that debt delinquency could be a strategic behaviour after all. Similarly, sanctions for predatory lending reduce the propensity for bad loan origination (Goodman & Smith, 2010;Ho & Pennington-Cross2006), whilst the tightness of information sharing regulations and infrastructure reduces poor judgement (Jappelli et al, 2008).…”

Assessing the Role of Mortgage Fraud, Confluence, and Spillover in the Contemporary Foreclosure Crisis

“…Government Accountability Office, 2007;Viles, 2007). Finally, some attention has been devoted to the prevalence of mortgage fraud (e.g., Gibeaut, 2007) and the quantity and quality of regulations directed at lending practices and foreclosure proceedings (e.g., Goodman & Smith, 2010;Immergluck, 2009Immergluck, , 2010bPence, 2006). Been et al (2011) and Gerardi et al (2011) highlight each of these factors in an interesting exchange on the leading causes of the foreclosure crisis.…”

“…Additionally, some research has detailed the nature and predictors of geographic variation in the distribution of these loan products (e.g., Mayer & Pence, 2008;Squires, Hyra, & Renner, 2009). Yet, with some notable exceptions (Doms et al, 2007;Gerardi & Willen, 2009;Goodman & Smith, 2010;Immergluck, 2010b;Rugh & Massey, 2010), systematic empirical analysis of the spatial dimensions of the contemporary foreclosure crisis has been rare. 1 What is more, the existing research yields an incomplete portrait of the factors most pertinent to shaping the observed spatial patterns.…”

“…Additionally, a growing body of research has documented the substantial geographic variation in foreclosure rates that exist in America and has explored some of the factors (e.g., rates of subprime lending, mortgage fraud, unemployment rates, declines in housing prices) most strongly correlated with foreclosure (e.g., Coulton, Schramm, & Hirsh, 2008;Doms, Furlong, & Krainer, 2007;Gerardi & Willen, 2009;Goodman & Smith, 2010;Immergluck, 2009Immergluck, , 2010aImmergluck, , 2010bPerkins, 2009;Rugh & Massey, 2010). While the existing research has yielded important insights about the types of loans and borrowers most apt to default and enter into foreclosure, the broader portrait of foreclosure patterns across America remain somewhat murky.…”

“…First, we evaluate the capacity for levels of mortgage fraud to serve as a potentially important leading indicator of significant foreclosure activity. Although mortgage fraud is occasionally mentioned as an important antecedent to the foreclosure crisis, it has been neglected in systematic empirical applications (e.g., Goodman & Smith, 2010;Immergluck, 2010a;Rugh & Massey, 2010). This is unfortunate because an emphasis on mortgage fraud-a common precursor to foreclosures in the recent housing crisis-highlights the potential utility of policies and practices directed at regulating fraudulent real estate transactions for reducing subsequent foreclosures and the various collateral consequences that often follow.…”