A Cost-Benefit Analysis of Judicial Foreclosure Delay and a Preliminary Look at New Mortgage Servicing Rules

34 Pages Posted: 24 Mar 2015 Last revised: 7 Jul 2015

See all articles by Larry Cordell

Larry Cordell

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Lauren Lambie-Hanson

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Date Written: March 1, 2015

Abstract

Since the start of the financial crisis, we have seen an extraordinary lengthening of foreclosure timelines, particularly in states that require judicial review to complete a foreclosure but also recently in nonjudicial states. Our analysis synthesizes findings from several lines of research, updates results, and presents new analysis to examine the costs and benefits of judicial foreclosure review. Consistent with previous studies, we find that judicial review imposes large costs with few, if any, offsetting benefits. We also provide early analysis of the new mortgage servicing rules enacted by the Consumer Financial Protection Bureau (CFPB) and find that these rules are contributing to even longer timelines, especially in nonjudicial states.

Keywords: Mortgage, Foreclosure, Regulation

JEL Classification: G21, G28, L85, R21

Suggested Citation

Cordell, Larry and Lambie-Hanson, Lauren, A Cost-Benefit Analysis of Judicial Foreclosure Delay and a Preliminary Look at New Mortgage Servicing Rules (March 1, 2015). FRB of Philadelphia Working Paper No. 15-14, Available at SSRN: https://ssrn.com/abstract=2583717 or http://dx.doi.org/10.2139/ssrn.2583717

Larry Cordell (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Lauren Lambie-Hanson

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

HOME PAGE: http://sites.google.com/laurenlambiehanson

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