Effects of Bankruptcy Exemptions and Foreclosure Laws on Mortgage Default and Foreclosure Rates
Posted: 29 Aug 2013
Date Written: August 29, 2013
This study analyzes the effects of state bankruptcy asset exemptions and foreclosure laws on mortgage default and foreclosure rates across different segments of the mortgage market. We found that the effects of these legal provisions are larger for sub-prime than for prime mortgages and larger for adjustable rate mortgages than for fixed rate mortgages. These results demonstrate that the effects of variation in bankruptcy exemptions and foreclosure laws is most pronounced in the most risky segments of the mortgage market, which are those that have been most affected by the continuing housing slump in the United States.
Keywords: bankruptcy exemptions, foreclosure laws, mortgage defaults, foreclosures
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