The Politics of Foreclosures
Charles A. Dice Working Paper No. 2017-21
87 Pages Posted: 17 Oct 2017 Last revised: 16 Nov 2017
Date Written: October 16, 2017
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: Suggested Citation