Abstract

http://ssrn.com/abstract=2344444
 


 



Bankruptcy During Foreclosure: Home Preservation Through Chapters 7 and 13


Mark R. Lindblad


UNC Center for Community Capital

Roberto Quercia


University of North Carolina (UNC) at Chapel Hill - Department of City and Regional Planning

Melissa B. Jacoby


University of North Carolina (UNC) at Chapel Hill - School of Law

Ling Wang


University of North Carolina (UNC) at Chapel Hill

Huifang Zhao


University of North Carolina (UNC) at Chapel Hill

October 23, 2013

UNC Legal Studies Research Paper No. 2344444

Abstract:     
Filing for bankruptcy is the primary legal mechanism by which homeowners in foreclosure can exert control over ownership of their home, yet little is known about the interplay between bankruptcy chapters, mortgage servicers, state foreclosure laws, and home foreclosure auctions. We analyze 4,280 lower-income homeowners in the United States who were more than 90 days late paying their 30-year fixed-rate mortgages. Two dozen organizations serviced these mortgages and initiated foreclosure between 2003 and 2012. We identify wide variation between mortgage servicers in their likelihood of bringing the property to auction. We also show that when homeowners in foreclosure filed for bankruptcy, foreclosure auctions were 70% less likely. Chapters 7 and 13 both reduce the hazard of auction, but the effect is five times greater for Chapter 13, which contains enhanced tools to preserve homeownership. Bankruptcy’s effects are strongest in states that permit power-of-sale foreclosure or withdraw homeowners’ right-of-redemption at the time of auction.

Number of Pages in PDF File: 36

Keywords: mortgage servicing, displacement, relocation, real estate owned, homeownership, default

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Date posted: October 25, 2013 ; Last revised: January 2, 2014

Suggested Citation

Lindblad, Mark R. and Quercia, Roberto and Jacoby, Melissa B. and Wang, Ling and Zhao, Huifang, Bankruptcy During Foreclosure: Home Preservation Through Chapters 7 and 13 (October 23, 2013). UNC Legal Studies Research Paper No. 2344444. Available at SSRN: http://ssrn.com/abstract=2344444 or http://dx.doi.org/10.2139/ssrn.2344444

Contact Information

Mark R. Lindblad (Contact Author)
UNC Center for Community Capital ( email )
Chapel Hill, NC 27599
United States
919.843.5749 (Phone)
HOME PAGE: http://www.ccc.unc.edu/
Roberto G. Quercia
University of North Carolina (UNC) at Chapel Hill - Department of City and Regional Planning ( email )
New East Building
Chapel Hill, NC 27599-3140
United States
919-962-4766 (Phone)
Not available (Fax)
Melissa B. Jacoby
University of North Carolina (UNC) at Chapel Hill - School of Law ( email )
Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States

Ling Wang
University of North Carolina (UNC) at Chapel Hill ( email )
Chapel Hill, NC 27599
United States
Huifang Zhao
University of North Carolina (UNC) at Chapel Hill ( email )
Chapel Hill, NC 27599
United States
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