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Get Sick, Get Out: The Medical Causes of Home Mortgage Foreclosures

41 Pages Posted: 12 Jun 2009  

Christopher T. Robertson

University of Arizona - James E. Rogers College of Law; Harvard University - Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics

Richard Egelhof

affiliation not provided to SSRN

Michael Hoke

affiliation not provided to SSRN

Date Written: August 18, 2008

Abstract

In recent years, there has been national alarm about the rising rate of home foreclosures, which now strike one in every 92 households in America and which contribute to even broader macroeconomic effects. The "standard account" of home foreclosure attributes this spike to loose lending practices, irresponsible borrowers, a flat real estate market, and rising interest rates. Based on our study of homeowners going through foreclosures in four states, we find that the standard account fails to represent the facts and thus makes a poor guide for policy. In contrast, we find that half of all foreclosures have medical causes, and we estimate that medical crises put 1.5 million Americans in jeopardy of losing their homes last year.

Half of all respondents (49%) indicated that their foreclosure was caused in part by a medical problem, including illness or injuries (32%), unmanageable medical bills (23%), lost work due to a medical problem (27%), or caring for sick family members (14%). We also examined objective indicia of medical disruptions in the previous two years, including those respondents paying more than $2,000 of medical bills out of pocket (37%), those losing two or more weeks of work because of injury or illness (30%), those currently disabled and unable to work (8%), and those who used their home equity to pay medical bills (13%). Altogether, seven in ten respondents (69%) reported at least one of these factors.

If these findings can be replicated in more comprehensive studies, they will suggest critical policy reforms. We lay out one approach, focusing on an insurance-model, which would help homeowners bridge temporary gaps caused by medical crises. We also present a legal proposal for staying foreclosure proceedings during verifiable medical crises, as a way to protect homeowners and to minimize the negative externalities of foreclosure.

Keywords: home foreclosures, medical events, medicine, mortgages, bankruptcy, insurance, homeownership

JEL Classification: R31, G21

Suggested Citation

Robertson, Christopher T. and Egelhof, Richard and Hoke, Michael, Get Sick, Get Out: The Medical Causes of Home Mortgage Foreclosures (August 18, 2008). Health Matrix: Journal of Law-Medicine, Vol. 18, No. 65, 2008. Available at SSRN: https://ssrn.com/abstract=1416947

Christopher T. Robertson (Contact Author)

University of Arizona - James E. Rogers College of Law ( email )

P.O. Box 210176
Tucson, AZ 85721-0176
United States

HOME PAGE: http://www.law.arizona.edu/faculty/getprofile.cfm?facultyid=714

Harvard University - Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics ( email )

23 Everett Street
Cambridge, MA 02155
United States

Richard Egelhof

affiliation not provided to SSRN

Michael Hoke

affiliation not provided to SSRN

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