Bankruptcy Exemptions and the Market for Mortgage Loans

41 Pages Posted: 5 Sep 1998

See all articles by Richard M. Hynes

Richard M. Hynes

University of Virginia School of Law

Jeremy Berkowitz

University of Houston - Department of Finance

Date Written: February 1998

Abstract

The recent explosion in personal bankruptcy filings has motivated research into whether credit markets are being adversely affected by generous legal provisions. Empirically, this question is examined by comparing credit conditions and bankruptcy exemptions across states. We note that the literature has focused on aggregate household credit, making no distinction between secured and unsecured credit. We argue that such aggregation obscures important differences in forms of credit. Most significantly, property exemptions do not prevent the home mortgage lender from foreclosing on the home if not fully repaid.

JEL Classification: K11, D12

Suggested Citation

Hynes, Richard M. and Berkowitz, Jeremy, Bankruptcy Exemptions and the Market for Mortgage Loans (February 1998). Federal Reserve Board FEDS Paper No. 98-7. Available at SSRN: https://ssrn.com/abstract=123548 or http://dx.doi.org/10.2139/ssrn.123548

Richard M. Hynes

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States
434-924-3743 (Phone)

Jeremy Berkowitz (Contact Author)

University of Houston - Department of Finance ( email )

Houston, TX 77204
United States

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