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Roberto G. Quercia, Spencer M. Cowan

Community-based foreclosure prevention programs can shorten time to resolution and lower rates of recidivism when they include certain types of interventions.

This paper examines the impact of community-based foreclosure prevention interventions using two proxy measures: time to resolution and rate of recidivism. These issues are examined with data from over 4,200 borrowers who received intense case-management, post-purchase counseling and/or assistance loans through the Mortgage Foreclosure Prevention Program in Minnesota.

Overall, the findings suggest that these interventions have a positive impact.

With regard to time to resolution, the time to outcome for borrowers served by the program was on average 10.5 months (315 days). With regard to the rate of recidivism, about one-quarter of borrowers who avoided foreclosure reported being delinquent again 12 months after program intervention, and about one-third were delinquent again after 36 months. Households that did not receive an assistance loan as part of the intervention had a higher incidence of recidivism over time, about 45 per cent.

Both time to resolution and recidivism among program participants compared favorably with those reported elsewhere for the industry.


Topics(s): Affordable Homeownership, Default, Bankruptcy, & Foreclosure, Housing Policy, Mortgage Finance