Protecting Minority Homeowners: Race, Foreclosure Counseling and Mortgage Modifications

Journal of Consumer Affairs, 47(2), 289-310.

22 Pages Posted: 24 Oct 2012 Last revised: 6 Feb 2014

See all articles by J. Michael Collins

J. Michael Collins

University of Wisconsin - Madison; Follette School of Public Affairs

Maximilian D. Schmeiser

Amazon Lending

Carly Urban

Montana State University - Bozeman - Department of Agricultural Economics and Economics

Date Written: 2013

Abstract

Millions of minority homeowners are at risk of losing their homes as a result of the housing crisis due to mortgage foreclosure and home repossession. One consumer-oriented policy response to this crisis is mortgage default counseling for borrowers. This study examines the rate at which minority borrowers seek default counseling and the resulting correlation between counseling and the probability that a borrower obtains a modification of his/her original mortgage contract terms. The results suggest that African Americans are more likely to be counseled, relative to Whites. However, Latinos or other non-White groups are no more or less likely to be counseled. The probability of loan modifications among counseled African Americans is also higher than other counseled borrowers. These results suggest that counseling policies and the public subsidy of default counseling may be one approach for promoting consumer financial well-being of these households, but also suggest counseling efforts might be better designed for other minority groups. These results also have implications for the application of counseling to other mortgage decisions, such as refinance.

Keywords: Mortgage Default and Foreclosure, Financial Counseling, Default Counseling, Mortgage Modification

Suggested Citation

Collins, J. Michael and Schmeiser, Maximilian D. and Urban, Carly, Protecting Minority Homeowners: Race, Foreclosure Counseling and Mortgage Modifications (2013). Journal of Consumer Affairs, 47(2), 289-310., Available at SSRN: https://ssrn.com/abstract=2166044 or http://dx.doi.org/10.2139/ssrn.2166044

J. Michael Collins

University of Wisconsin - Madison ( email )

United States
6086160369 (Phone)

Follette School of Public Affairs ( email )

1180 Observatory Drive
Madison, WI 53706-1393
United States

Maximilian D. Schmeiser (Contact Author)

Amazon Lending ( email )

Seattle, WA 98144
United States

Carly Urban

Montana State University - Bozeman - Department of Agricultural Economics and Economics ( email )

Bozeman, MT 59717-2920
United States
4069942005 (Phone)

HOME PAGE: http://www.montana.edu/urban

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
66
Abstract Views
808
rank
369,493
PlumX Metrics