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Research Seminars & Workshops @ IRES

Associate Professor Sumit Agarwal
Department of Real Estate, NUS

The Politics of Mortgage Foreclosures


21 March 2012, Wednesday


4.00pm - 5.30pm


RMI Executive Seminar Room


We show that the start of foreclosure on delinquent mortgages is delayed in 2009-2010 if the loan is located in a congressional district whose representative is a member of the Financial Services Committee in the U.S. House of Representatives, despite there being no differences in baseline delinquency rates. The results are robust to restricting the sample to the districts whose representatives were elected to the House and appointed to the committee well before the financial crisis.

These results are robust to controlling for many loan- and zip code-level factors, state-specific time fixed effects, restricting the analysis to various subsamples, using alternative econometric methods and conducting placebo tests. In the subsample of loans for which the services have the largest flexibility, these effects are stronger during the passage of Dodd-Frank Act but not immediately before and after. Our calculations suggest that the cost of delay for the financial sector is greater than the financial sector's political campaign contributions but less than its lobbying expenditures during this period.

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