Pathways After Default

What Happens to Distressed Mortgage Borrowers and Their Homes?

Sewin Chan, Claudia Sharygin, Vicki Been, Andrew Haughwout

Research output: Contribution to journalArticle

Abstract

We use a detailed dataset of seriously delinquent mortgages to examine the dynamic process of mortgage default-from initial delinquency and default to final resolution of the loan and disposition of the property. We estimate a two-stage competing risk hazard model to assess the factors associated with post-default outcomes, including whether a borrower receives a legal notice of foreclosure. In particular, we focus on a borrower's ability to avoid a foreclosure auction by getting a modification, by refinancing the loan, or by selling the property. We find that the outcomes of the foreclosure process are significantly related to: loan characteristics including the borrower's credit history, current loan-to-value and the presence of a junior lien; the borrower's post-default payment behavior, including the borrower's participation in foreclosure counseling; neighborhood characteristics such as foreclosure rates, recent house price depreciation and median income; and the borrower's race and ethnicity.

Original languageEnglish (US)
Pages (from-to)342-379
Number of pages38
JournalJournal of Real Estate Finance and Economics
Volume48
Issue number2
DOIs
StatePublished - Feb 2014

Fingerprint

foreclosure
loan
auction
ethnicity
delinquency
selling
disposition
counseling
credit
Pathway
Mortgages
Foreclosure
hazard
income
participation
Loans
ability
history
Values

Keywords

  • Default
  • Foreclosure
  • Modification
  • Mortgage
  • REO

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics
  • Urban Studies

Cite this

Pathways After Default : What Happens to Distressed Mortgage Borrowers and Their Homes? / Chan, Sewin; Sharygin, Claudia; Been, Vicki; Haughwout, Andrew.

In: Journal of Real Estate Finance and Economics, Vol. 48, No. 2, 02.2014, p. 342-379.

Research output: Contribution to journalArticle

Chan, Sewin ; Sharygin, Claudia ; Been, Vicki ; Haughwout, Andrew. / Pathways After Default : What Happens to Distressed Mortgage Borrowers and Their Homes?. In: Journal of Real Estate Finance and Economics. 2014 ; Vol. 48, No. 2. pp. 342-379.
@article{c99100bf33be4486bf3be3f160d0335d,
title = "Pathways After Default: What Happens to Distressed Mortgage Borrowers and Their Homes?",
abstract = "We use a detailed dataset of seriously delinquent mortgages to examine the dynamic process of mortgage default-from initial delinquency and default to final resolution of the loan and disposition of the property. We estimate a two-stage competing risk hazard model to assess the factors associated with post-default outcomes, including whether a borrower receives a legal notice of foreclosure. In particular, we focus on a borrower's ability to avoid a foreclosure auction by getting a modification, by refinancing the loan, or by selling the property. We find that the outcomes of the foreclosure process are significantly related to: loan characteristics including the borrower's credit history, current loan-to-value and the presence of a junior lien; the borrower's post-default payment behavior, including the borrower's participation in foreclosure counseling; neighborhood characteristics such as foreclosure rates, recent house price depreciation and median income; and the borrower's race and ethnicity.",
keywords = "Default, Foreclosure, Modification, Mortgage, REO",
author = "Sewin Chan and Claudia Sharygin and Vicki Been and Andrew Haughwout",
year = "2014",
month = "2",
doi = "10.1007/s11146-012-9400-1",
language = "English (US)",
volume = "48",
pages = "342--379",
journal = "Journal of Real Estate Finance and Economics",
issn = "0895-5638",
publisher = "Springer Netherlands",
number = "2",

}

TY - JOUR

T1 - Pathways After Default

T2 - What Happens to Distressed Mortgage Borrowers and Their Homes?

AU - Chan, Sewin

AU - Sharygin, Claudia

AU - Been, Vicki

AU - Haughwout, Andrew

PY - 2014/2

Y1 - 2014/2

N2 - We use a detailed dataset of seriously delinquent mortgages to examine the dynamic process of mortgage default-from initial delinquency and default to final resolution of the loan and disposition of the property. We estimate a two-stage competing risk hazard model to assess the factors associated with post-default outcomes, including whether a borrower receives a legal notice of foreclosure. In particular, we focus on a borrower's ability to avoid a foreclosure auction by getting a modification, by refinancing the loan, or by selling the property. We find that the outcomes of the foreclosure process are significantly related to: loan characteristics including the borrower's credit history, current loan-to-value and the presence of a junior lien; the borrower's post-default payment behavior, including the borrower's participation in foreclosure counseling; neighborhood characteristics such as foreclosure rates, recent house price depreciation and median income; and the borrower's race and ethnicity.

AB - We use a detailed dataset of seriously delinquent mortgages to examine the dynamic process of mortgage default-from initial delinquency and default to final resolution of the loan and disposition of the property. We estimate a two-stage competing risk hazard model to assess the factors associated with post-default outcomes, including whether a borrower receives a legal notice of foreclosure. In particular, we focus on a borrower's ability to avoid a foreclosure auction by getting a modification, by refinancing the loan, or by selling the property. We find that the outcomes of the foreclosure process are significantly related to: loan characteristics including the borrower's credit history, current loan-to-value and the presence of a junior lien; the borrower's post-default payment behavior, including the borrower's participation in foreclosure counseling; neighborhood characteristics such as foreclosure rates, recent house price depreciation and median income; and the borrower's race and ethnicity.

KW - Default

KW - Foreclosure

KW - Modification

KW - Mortgage

KW - REO

UR - http://www.scopus.com/inward/record.url?scp=84893643376&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84893643376&partnerID=8YFLogxK

U2 - 10.1007/s11146-012-9400-1

DO - 10.1007/s11146-012-9400-1

M3 - Article

VL - 48

SP - 342

EP - 379

JO - Journal of Real Estate Finance and Economics

JF - Journal of Real Estate Finance and Economics

SN - 0895-5638

IS - 2

ER -