Explaining Multi-Family Property Foreclosures
21 Pages Posted: 19 Jul 2010 Last revised: 3 Jan 2014
Date Written: December 31, 2013
In this study, we use a new and comprehensive dataset that provides information on all multifamily properties located in Cook County, IL to provide new evidence on the determinants of foreclosures of multifamily properties. We find that foreclosures are more likely when building are older and have higher ratios of loan to value, and where buildings are located in Census Tracts where median household incomes are lower and unemployment rates are higher. We also find that loan vintage is a key determinant of foreclosure.
Our study provides new information on what factors increase or decrease the probability that a rental property will go into foreclosure, which can be used by policymakers to craft policies that will mitigate factors that lead to foreclosure and enhance factors that reduce the likelihood of foreclosure: properties with mortgages that closed after 2000 are significantly more likely to face foreclosure, and the probability rises throughout the 2001-2009 period, peaking in 2009.
Keywords: Cook County, commercial real estate, financial crisis, foreclosure, multi-family
JEL Classification: G21
Suggested Citation: Suggested Citation