TY - JOUR
T1 - The conditional probability of foreclosure
T2 - An empirical analysis of conventional mortgage loan defaults
AU - Phillips, Richard A.
AU - VanderHoff, James H.
PY - 2004
Y1 - 2004
N2 - This paper analyzes the factors affecting the conditional probability that defaulted residential mortgage loans will foreclose. We analyze a large national sample of conventional loans, which have been in default at least once during the 1988 to 1994 period. For such loans, lenders and borrowers either individually or jointly make choices which lead to the following outcomes: (1) resumption of payments, (2) termination by prepayment, or (3) foreclosure. Our estimates of a logit model indicate that termination option values and local area economic and housing market conditions affect default resolution probabilities. Perhaps more importantly, simulations using the logit model indicate that the efficiency of the default resolution process may be substantially improved by legal and regulatory reforms.
AB - This paper analyzes the factors affecting the conditional probability that defaulted residential mortgage loans will foreclose. We analyze a large national sample of conventional loans, which have been in default at least once during the 1988 to 1994 period. For such loans, lenders and borrowers either individually or jointly make choices which lead to the following outcomes: (1) resumption of payments, (2) termination by prepayment, or (3) foreclosure. Our estimates of a logit model indicate that termination option values and local area economic and housing market conditions affect default resolution probabilities. Perhaps more importantly, simulations using the logit model indicate that the efficiency of the default resolution process may be substantially improved by legal and regulatory reforms.
UR - http://www.scopus.com/inward/record.url?scp=10844281993&partnerID=8YFLogxK
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U2 - 10.1111/j.1080-8620.2004.00103.x
DO - 10.1111/j.1080-8620.2004.00103.x
M3 - Article
AN - SCOPUS:10844281993
SN - 1080-8620
VL - 32
SP - 571
EP - 587
JO - Real Estate Economics
JF - Real Estate Economics
IS - 4
ER -