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Tuesday, May 15, 2018 at 2:00pm to 3:30pm
Warren Hall, B75
AEP Seminar, Warren Hall
Stuart Gabriel (UCLA Anderson School of Management)
A Crisis of Missed Opportunities? Foreclosure Costs and Mortgage Modification During the Great Recession
Abstract: We investigate the housing and broader economic effects of the 2000s crisis-period California Foreclosure Prevention Laws (CFPLs). The CFPLs encouraged lender mortgage modifications by substantially increasing the pecuniary and time costs of foreclosure. Results show that the CFPLs prevented 124,000 California foreclosures, increased house prices by 6.2 percent, and created $310 billion of housing wealth. Findings further indicate that gains in housing wealth translated into increased durable consumption. Disaggregated estimates reveal that the CFPL house price increases were markedly higher in the hard-hit areas of Southern California. Altogether, the CFPLs were highly effective in mitigating foreclosures and stabilizing housing markets.
Cornell SC Johnson College of Business, Dyson School of Applied Economics and Management
Sue Snyder
607-254-8856
Stuart Gabriel
UCLA Anderson School of Management
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