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The Politics of Foreclosures

87 Pages Posted: 17 Oct 2017 Last revised: 16 Nov 2017

Sumit Agarwal

Georgetown University - Department of Finance

Gene Amromin

Federal Reserve Bank of Chicago

Itzhak Ben-David

Ohio State University - Fisher College of Business, Finance Department; National Bureau of Economic Research (NBER)

Serdar Dinc

Rutgers University

Date Written: October 16, 2017

Abstract

U.S. House of Representatives Financial Services Committee considered many important banking reforms in 2009-2010 including the Dodd-Frank Act. We show that during this period, the foreclosure starts on delinquent mortgages were delayed in the districts of committee members even though there was no difference in delinquency rates between committee and non-committee districts. In these areas, banks delayed the start of the foreclosure process by 0.5 months (relative to the 12-month average). The total estimated cost of delay to lenders is an order of magnitude greater than the campaign contributions by the Political Action Committees of the largest mortgage servicing banks to the committee members in that period and is comparable to these banks’ lobbying expenditures.

Keywords: Political Economy, Real Estate Lending, Household Finance, Financial Crisis, Lobbying

JEL Classification: D72, G21, G01

Suggested Citation

Agarwal, Sumit and Amromin, Gene and Ben-David, Itzhak and Dinc, Serdar, The Politics of Foreclosures (October 16, 2017). Georgetown McDonough School of Business Research Paper No. 3054046; Fisher College of Business Working Paper No. 2017-03-021; Charles A. Dice Working Paper No. 2017-21. Available at SSRN: https://ssrn.com/abstract=3054046

Sumit Agarwal

Georgetown University - Department of Finance ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-8207 (Phone)

HOME PAGE: http://www.ushakrisna.com

Gene Amromin

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
230 S. LaSalle
Chicago, IL 60604
United States
3123225368 (Phone)
3123226011 (Fax)

Itzhak Ben-David

Ohio State University - Fisher College of Business, Finance Department ( email )

2100 Neil Avenue
Fisher 700D
Columbus, OH 43210-1144
United States
773 988 1353 (Phone)

HOME PAGE: http://fisher.osu.edu/fin/faculty/Ben-David/index.htm

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://fisher.osu.edu/fin/faculty/Ben-David/

Serdar Dinc (Contact Author)

Rutgers University ( email )

111 Washington Avenue
Newark, NJ 07102
United States

HOME PAGE: http://serdardinc.com

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