Accurate, Focused Research on Law, Technology and Knowledge Discovery Since 2002

You Are Here: Home » Government Documents » Do Borrower Rights Improve Borrower Outcomes? Evidence from the Foreclosure Process

Do Borrower Rights Improve Borrower Outcomes? Evidence from the Foreclosure Process

by on

Do Borrower Rights Improve Borrower Outcomes? Evidence from the Foreclosure Process – Kristopher Gerardi, Lauren Lambie-Hanson, and Paul S. Willen, Working Paper 2011-16. November 2011

  • “Many have argued that laws that give borrowers additional rights can help prevent unnecessary foreclosures by giving borrowers more time to cure their delinquencies or by facilitating workouts. We first compare states that allow power-of-sale foreclosures with states that do not and find that preventing power-of-sale foreclosures extends the foreclosure timeline dramatically but does not, in the long run, lead to fewer foreclosures. Borrowers in states that allow power-of-sale foreclosure are no less likely to cure and no less likely to renegotiate their loans. We then exploit a “right-to-cure” law instituted in Massachusetts in May 2008. We employ a differences-in-differences approach to evaluate the effect of the policy, comparing Massachusetts with neighboring states that did not adopt such laws. We find that the right-to-cure law lengthens the foreclosure timeline but does not lead to better outcomes for borrowers.”
  • Related postings on financial system
    • LinkedIn

    Sorry, comments are closed for this post.