The Impact of Foreclosure Delay on U.S. Employment


The Impact of Foreclosure Delay on U.S. Employment

The Impact of Foreclosure Delay on U.S. Employment

The Impact of Foreclosure Delay on U.S. Employment

Kyle F. Herkenhoff

University of Minnesota – Duluth – Department of Economics

Lee E. Ohanian

University of California, Los Angeles (UCLA) – Department of Economics; National Bureau of Economic Research (NBER)

September 2015

NBER Working Paper No. w21532


This paper documents that the time required to initiate and complete a home foreclosure rose from about 9 months on average prior to the Great Recession to an average of 15 months during the Great Recession and afterward. We refer to these changes as foreclosure delay. We also document that many borrowers who are in foreclosure ultimately exit foreclosure and keep their homes by making up for missed mortgage payments. We analyze the impact of foreclosure delay on the U.S. labor market as an implicit credit line from a lender to a borrower (mortgagor) within a search model. In the model, foreclosure delay provides unemployed mortgagors with additional time to search for a high-paying job. We find that foreclosure delay decreases mortgagor employment by about 0.75 percentage points, nearly doubles the stock of delinquent mortgages, increases the rate of homeownership by about 0.3 percentage points, and increases job match quality, as mortgagors search longer. Severe foreclosure delays, such as those observed in Florida and New Jersey, can depress mortgagor employment by up to 1.3 percentage points. The model results are consistent with PSID and SCF data that show that employment rates rise for delinquent mortgagors once the mortgagor is in the foreclosure process.

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One Response to “The Impact of Foreclosure Delay on U.S. Employment”

  1. If this posted Abstract is as good as the entire report, and its computer model, then I tend to believe that the report is a product of GIGO (Garbage In Garbage Out).

    If the self proclaimed “expert economists” want to understand what happened in this country since the beginning of this century, is suggest they study some of my court documents filed since 2004, when I began documenting the then upcoming 2007 economic collapse and how, and why it was engineered by U.S. Government agencies, and that it would begin in 2007 and lead to a great depression!

    You cannot have it more accurate than that, yet I don’t call it “Prediction” because I had discovered the criminal scheme, and I was certain of its occurrence. Calculation of 2007-2008 timeframe, however, was with my proprietary knowhow, if that can be called “Prediction”.

    I haven’t heard of anyone else who has documented similar facts leading to calculation of the actual time-frame of the American Meltdown in 2007, having cost the genocide of tens of millions of Americans by now, and in the near future, in addition to the plunder of whatever money the 99% makes in the future to pay for the plunder of the 1%, of the past few years.
    As a sample, here is a short quote from a recent related comment in this page:

    “Therefore, ?American Foreclosure Industry is state-sponsored terrorism?, as it has been fully sponsored, and supported, by all components of individual states as well as by all components of the federal government, including its legislators who have been bribed by the likes of ?FOA loans?. -”
    Thank you.
    “Kareem Salessi”


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