Mandatory Mediation and the Renegotiation of Mortgage Contracts

30 Pages Posted: 19 Jan 2016

See all articles by J. Michael Collins

J. Michael Collins

University of Wisconsin - Madison

Carly Urban

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

Date Written: December 2015

Abstract

Scholars have studied the use of mediation – a third party to facilitate the settlement of a dispute – in a variety of settings. The theoretical literature asserts that mediated negotiation weakly dominates unmediated negotiation, increasing the flow of information between the principal and the agent. This study tests these predictions using a mandatory mediation policy for mortgage contracts in default. Difference‐in‐differences estimates from three metropolitan statistical areas before and after at least one sub‐jurisdiction imposed mandatory mediation show that mediation increased the flow of information, especially for selected sub‐groups, as demonstrated by increasing rates of loan contract modifications.

Suggested Citation

Collins, J. Michael and Urban, Carly, Mandatory Mediation and the Renegotiation of Mortgage Contracts (December 2015). The Economic Journal, Vol. 125, Issue 589, pp. 1734-1763, 2015. Available at SSRN: https://ssrn.com/abstract=2716744 or http://dx.doi.org/10.1111/ecoj.12106

J. Michael Collins

University of Wisconsin - Madison ( email )

United States
6086160369 (Phone)

Carly Urban (Contact Author)

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
0
Abstract Views
185
PlumX Metrics