Federal Reserve Bank of New York
Determinants of mortgage default and consumer credit use: the effects of foreclosure laws and foreclosure delays
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.
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.
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- G1 - Financial Economics - - General Financial Markets
- K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
Keywords: mortgage default; state foreclosure laws; consumer finance
This item with handle RePEc:fip:fednsr:732
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