Mortgage Default Among Rural, Low-Income Borrowers

Levy Economics Institute Working Paper No. 96

39 Pages Posted: 25 Nov 1998

See all articles by Roberto Quercia

Roberto Quercia

University of Texas at Arlington

George W. McCarthy

Bard College

Michael A. Stegman

MacArthur Foundation

Date Written: 1993

Abstract

In this working paper, Quercia, McCarthy, and Stegman use data obtained on 874 low income, rural borrowers participating in the Section 502 Home Ownership program administered by the Farmer's Home Administration (FmHA), and apply two multivariate proportional hazard models in order to analyze default decisions among these borrowers over time. The authors cite two key findings relating to default literature: (1) that contrary to prior findings, the size of the mortgage payment relative to borrower income plays a significant part in the default decision; and (2) borrower characteristics traditionally deemed risky (including minority status or being a female head of household) had no significant effect on borrower default. Rather, borrower-related factors--such as a change in marital status or the exodus of children from the household--played a larger part in the default decisions of borrowers participating in the FmHA program.

Suggested Citation

Quercia, Roberto and McCarthy, George W. and Stegman, Michael A., Mortgage Default Among Rural, Low-Income Borrowers (1993). Levy Economics Institute Working Paper No. 96, Available at SSRN: https://ssrn.com/abstract=139564 or http://dx.doi.org/10.2139/ssrn.139564

Roberto Quercia (Contact Author)

University of Texas at Arlington

415 S West St Apt no 205
Arlington, TX 76013
United States
817-272-3502 (Phone)
817-272-5801 (Fax)

George W. McCarthy

Bard College ( email )

Blithewood
The Jerome Levy Economics Institute
Annandale-on-Hudson, NY 12504
United States

Michael A. Stegman

MacArthur Foundation ( email )

Chicago, IL 60603
United States

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