Topic
Foreclosure
About: Foreclosure is a research topic. Over the lifetime, 1305 publications have been published within this topic receiving 21413 citations. The topic is also known as: forced sale & compulsory auction.
Papers published on a yearly basis
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Papers
TL;DR: The market for housing differs in several important ways from the textbook model of a liquid asset market with exogenous fundamentals as mentioned in this paper, which implies that the price at which a house is sold can be influenced not only by general supply and demand conditions, but also by idiosyncratic factors, including the urgency of the sale and the effects of ownership transfer on the physical quality of the house.
Abstract: The market for housing differs in several important ways from the textbook model of a liquid asset market with exogenous fundamentals. This implies that the price at which a house is sold can be influenced not only by general supply and demand conditions, but also by idiosyncratic factors, including the urgency of the sale and the effects of the ownership transfer on the physical quality of the house. First, houses are productive only when people are living in them. Owning an empty house is equivalent to throwing away the dividend on a financial asset. Second, houses are fragile assets that need maintenance, and are vulnerable to van dalism. Unoccupied houses are particularly vulnerable and expensive to protect. Third, short-term rental contracts involve high transactions costs, resulting from the moving costs of renters and the need of homeowners to protect their property against damage. Fourth, houses are expensive, indivisible, and heterogeneous assets. Each house has certain unique characteristics which are likely to appeal to certain poten tial buyers and not to others, so selling a house requires matching it with an appro priate buyer. Because of the high costs of intermediation in housing, this task is normally undertaken by a real estate broker rather than a dealer. Fifth, most home owners must finance their purchases using mortgages, collateralized debt contracts that transfer home ownership to the mortgage lender through a foreclosure process if the homeowner defaults. The expansion of mortgage credit in the early 2000s and the recent decline in house prices have led to an unprecedented increase in foreclosures since 2006. Foreclosures transfer houses to financial institutions which must maintain and pro tect them until they can be sold. Foreclosed houses are likely to sell at low prices, both because they may have been physically damaged during the foreclosure pro cess, and because financial institutions have an incentive to sell them quickly. In a liquid market, an asset can be sold rapidly with a minimal impact on its price, but
828 citations
TL;DR: The first hints of trouble in the mortgage market surfaced in mid-2005, and conditions subsequently began to deteriorate rapidly as mentioned in this paper, and by the third quarter of 2008, the share of seriously delinquent mortgages had surged to 5.2%.
Abstract: The first hints of trouble in the mortgage market surfaced in mid-2005, and conditions subsequently began to deteriorate rapidly. According to data from the Mortgage Bankers Association, the share of mortgage loans that were “seriously delinquent” (90 days or more past due or in the process of foreclosure) averaged 1.7 percent from 1979 to 2006, with a low of about 0.7 percent (in 1979) and a high of about 2.4 percent (in 2002). But by the third quarter of 2008, the share of seriously delinquent mortgages had surged to 5.2 percent. These delinquencies foreshadowed a sharp rise in foreclosures: roughly 1.7 million foreclosures were started in the first three quarters of 2008, an increase of 62 percent from the 1.1 million in the first three quarters of 2007 (Federal Reserve estimates based on data from the Mortgage Bankers Association). No precise national data exist on what share of foreclosures that start are actually completed, but anecdotal evidence suggests that historically the proportion has been somewhat less than half (Cordell, Dynan, Lehnert, Liang, and Mauskopf, 2008). Mortgage defaults and delinquencies are particularly concentrated among borrowers whose mortgages are classified as “subprime” or “near-prime.” Some key players in the mortgage market typically group these two into a single category, which we will call “nonprime” lending. Although the categories are not rigidly defined, subprime loans are generally targeted to borrowers who have tarnished credit histories and little savings available for down payments. Near-prime mortgages are made to borrowers with more minor credit quality issues or borrowers who are unable or unwilling to
823 citations
Posted Content•
TL;DR: In this article, the authors formulate a complete, but analytically simple, equilibrium model of vertical mergers to evaluate the logic of standard vertical foreclosure claims and the criticisms made of those claims.
Abstract: The authors formulate a complete, but analytically simple, equilibrium model of vertical mergers to evaluate the logic of standard vertical foreclosure claims and the criticisms made of those claims. The model includes incentives of the integrated firm and unintegrated input suppliers to exclude rivals, and the potential holdout problem. In this fully specified model, vertical foreclosure can emerge in equilibrium. Copyright 1990 by American Economic Association.
520 citations
TL;DR: This article developed a simple theoretical model to interpret these empirical findings and to assess potential foreclosure-reduction policies, which implies that lenders and policymakers face an information problem in trying to help borrowers with negative equity, because it is hard to determine which owners really need help in order to stay in their homes.
485 citations
TL;DR: The authors examine the effects of constituents, special interests, and ideology on congressional voting on two of the most significant pieces of legislation in US economic history, and find that representatives whose constituents experience a sharp increase in mortgage defaults are more likely to support the Foreclosure Prevention Act, especially in competitive districts.
Abstract: We examine the effects of constituents, special interests, and ideology on congressional voting on two of the most significant pieces of legislation in US economic history. Representatives whose constituents experience a sharp increase in mortgage defaults are more likely to support the Foreclosure Prevention Act, especially in competitive districts. Interestingly, representatives are more sensitive to defaults of their own-party constituents. Special interests in the form ofhigher campaign contributions from the financial industry increase the likelihood of supporting the Emergency Economic Stabilization Act. However, ideologically conservative representatives are less responsive to both constituent and special interests. (JEL D72, G21, G28)
395 citations
Performance Metrics
| Year | Papers |
|---|---|
| 2025 | 17 |
| 2024 | 25 |
| 2023 | 62 |
| 2022 | 56 |
| 2021 | 32 |
| 2020 | 34 |