In or Out of Mortgage Trouble? A Study of Bankrupt Homeowners
Melissa B. Jacoby
University of North Carolina (UNC) at Chapel Hill - School of Law
Daniel T. McCue
affiliation not provided to SSRN
Eric S. Belsky
September 16, 2011
American Bankruptcy Law Journal, Vol. 85, No. 3, pp. 291-322, 2011
UNC Legal Studies Research Paper No. 1963244
We examine the determinants of missed payments and foreclosure initiation among a national sample of homeowners who filed for personal bankruptcy in 2007, using a rich dataset from the 2007 Consumer Bankruptcy Project.
Credit access had a significant effect on keeping mortgages current across all of our models: access to, and reliance on, credit cards reduced the chance of missed payments and default, increasing the likelihood that bankruptcy could produce a fresh start. Missed mortgage payments also were associated with a substantial drop in income and with the use of a mortgage broker. The probability of foreclosure initiation was lower in states with longer foreclosure timelines.
We discuss the implications of our findings for consumer credit regulation, bankruptcy reform, and an integrated view of federal bankruptcy law and state foreclosure law.
Number of Pages in PDF File: 32
Date posted: November 23, 2011