Regulating zombie mortgages / Jonathan Lee, Duc Duy Nguyen, Huyen Nguyen ; editor: Halle Institute for Economic Research (IWH) - Member of the Leibniz Association
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Discovery
1891049496
URN
urn:nbn:de:gbv:3:2-1065469
DOI
ISBN
ISSN
Autorin / Autor
Beiträger
Körperschaft
Erschienen
Halle (Saale), Germany : Halle Institute for Economic Research (IWH) - Member of the Leibniz Association, June 2024
Umfang
1 Online-Ressource (III, 54 Seiten, 1,19 MB) : Diagramme
Ausgabevermerk
Sprache
eng
Anmerkungen
Literaturverzeichnis: Seite 34-36
Inhaltliche Zusammenfassung
Using the adoption of Zombie Property Law (ZL) across several US states, we show that increased lender accountability in the foreclosure process affects mortgage lending decisions and standards. Difference-in-differences estimations using a state border design show that ZL incentivizes lenders to screen mortgage applications more carefully: they deny more applications and impose higher interest rates on originated loans, especially risky loans. In turn, these loans exhibit higher ex-post performance. ZL also affects lender behavior after borrowers become distressed, causing them to strategically keep delinquent mortgages alive. Our findings inform the debate on policy responses to foreclosure crises.
Schriftenreihe
IWH-Diskussionspapiere ; 2024, no. 16 (June 2024) ppn:837399270