An investigation of the time between mortgage default and foreclosure

This paper evaluates the speed at which lender's enter the mortgage foreclosure process, interpreting slower rates as evidence of forbearance. A telephone survey was conducted to evaluate the presence of lender discrimination in defaults that lead to foreclosure in New Orleans, Louisiana between 1985 and 1990. These data are used to estimate the independent effects of race and neighbourhood characteristics on the extent of lender assistance during the foreclosure process. The analysis does not reveal discrimination based on race of borrower or racial composition of the neighbourhood. Instead, greater time in default is granted loans with lower interest rates and loans with outstanding balances below the mean value of housing in the surrounding neighbourhood.