Residential mortgage default Theory works and so does policy

Using a national loan level data set we examine loan default as explained by local demo graphic characteristics and state level legislation that regulates foreclosure procedures and predatory lending using a hierarchical linear model When controlling for loan and local conditions we observe significant variation in the default rate across states with lower default levels in states with higher temporal and financial costs to lenders State level legislative influences provide a foundation for discussion of national level policy that further regulates predatory lending and financial institution foreclosure activities (C) 2010 Elsevier Inc All rights reserved