Economic Brief

September 2010, No. 10-09

The Effects of Local Demographic Characteristics and State-Level Legislation on Foreclosure Rates

Ross Lawrence and Brent C Smith

Problems in the housing sector have prompted research into the causes of default by borrowers. The terms of the loans that were made, the characteristics of borrowers, and local economic conditions, among other factors, all contributed significantly to differences in default rates. State-level legislation may also have played a role by making it more costly for lenders in some states to proceed to foreclose on defaulted mortgages.

Our Research Focus: Consumer Finance, Financial Regulation

Additional Resources

Crews Cutts, Amy, and William A. Merrill, "Interventions in Mortgage Default: Policies and Practices to Prevent Home Loss and Lower Costs." Freddie Mac Working Paper No. 08-01, March 2008.

Ghent, Andra C., and Marianna Kudlyak, "Recourse and Residential Mortgage Default: Theory and Evidence from U.S. States." Federal Reserve Bank of Richmond Working Paper No. 09-10R, June 2010.

Goodman, Allen C., and Brent C. Smith, "Housing Default: Theory Works and So Does Policy." Federal Reserve Bank of Richmond Working Paper No. 10-10, May 2010.

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