Journal of Banking & Finance Vol. 124 2021
Statutory right of redemption and its influence on defaulted mortgage outcomes
open access
Abstract
This paper provides empirical evidence that a strong statutory right of redemption leads to a statistically significant and an economically large impact in reducing bankruptcy filings. Under the statutory right of redemption, borrowers can repurchase the property after the foreclosure auction at a certain price. Implementations of the statutory right of redemption, however, vary substantially among states. When categorizing the redemption rights from an economic perspective, we find that a strong redemption right leads to a greater than 30% decrease in the odds that a borrower with a defaulted mortgage will file for bankruptcy.
- DOI
- 10.1016/j.jbankfin.2021.106058
- Volume
- 124
- Pages
- 106058
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib