Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of New York
Staff Reports
Determinants of mortgage default and consumer credit use: the effects of foreclosure laws and foreclosure delays
Sewin Chan
Andrew F. Haughwout
Andrew Hayashi
Wilbert Van der Klaauw
Abstract

The mortgage default decision is part of a complex household credit management problem. We examine how factors affecting mortgage default spill over to other credit markets. As home equity turns negative, homeowners default on mortgages and HELOCs at higher rates, whereas they prioritize repaying credit cards and auto loans. Larger unused credit card limits intensify the preservation of credit cards over housing debt. Although mortgage non-recourse statutes increase default on all types of housing debt, they reduce credit card defaults. Foreclosure delays increase default rates for both housing and non-housing debts. Our analysis highlights the interconnectedness of debt repayment decisions.


Download Full text
Cite this item
Sewin Chan & Andrew F. Haughwout & Andrew Hayashi & Wilbert Van der Klaauw, Determinants of mortgage default and consumer credit use: the effects of foreclosure laws and foreclosure delays, Federal Reserve Bank of New York, Staff Reports 732, 01 Jun 2015.
More from this series
JEL Classification:
Subject headings:
Keywords: mortgage default; state foreclosure laws; consumer finance
For corrections, contact Amy Farber ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal