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Impact of Foreclosure Laws on Mortgage Loan Supply and Performance

49 Pages Posted: 12 Sep 2016  

Tien Foo Sing

National University of Singapore (NUS) - Department of Real Estate

Yonglin Wang

National University of Singapore (NUS)

Daxuan Zhao

Renmin University of China - School of Business

Date Written: September 10, 2016

Abstract

This paper measures the impact of three types of defaulter-friendly foreclosure laws on the behaviors of mortgage lenders in loan origination, and borrowers in default decision. To disentangle the “pure” influence of foreclosure laws from that of unobserved regional factors, we use the border identification strategy to sort the loan sample in the zip codes on both sides of a border dividing states by the foreclosure laws adopted. Unlike the previous research, we find no conclusive evidence on the causal effects of foreclosure laws on loan supply and default risk. The empirical results are highly sensitive to fixed effect specifications, time period, and sample selection.

Keywords: mortgage lending, mortgage default, foreclosure laws

JEL Classification: G21

Suggested Citation

Sing, Tien Foo and Wang, Yonglin and Zhao, Daxuan, Impact of Foreclosure Laws on Mortgage Loan Supply and Performance (September 10, 2016). Available at SSRN: https://ssrn.com/abstract=2837333 or http://dx.doi.org/10.2139/ssrn.2837333

Tien Foo Sing (Contact Author)

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

Yonglin Wang

National University of Singapore (NUS) ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

Daxuan Zhao

Renmin University of China - School of Business ( email )

Beijing
China

HOME PAGE: http://daxuanzhao.weebly.com/

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