The Impact of the 2005 Bankruptcy Law on Subprime Mortgage Performance
Posted: 21 May 2019
Date Written: April 8, 2010
This paper, for the first time investigates the effects of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 on subprime mortgage performance. Based on a large mortgage dataset, the study quantifies that the new legislation successfully reduces the number of subprime mortgage borrowers filing for bankruptcy. However, the new law has significant and negative impacts on subprime mortgage performance. Specifically, it has caused an unnecessarily higher number of foreclosures and reduced the success rate of bankruptcy filings. This has a direct influence on the subprime financial crisis.
Keywords: bankruptcy law, subprime
JEL Classification: G21, G33, K35
Suggested Citation: Suggested Citation