Bank Delays in the Resolution of Delinquent Mortgages The Problem of Limbo Loans

Limbo loans are delinquent mortgage loans that have not progressed to resolution. We utilize a unique legal database for Florida and find no support for resolution delays from bottlenecks or bank capital constraints. Instead, the impairment of property rights can be used to help explain both the lik...

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Bibliographic Details
Published inThe Journal of real estate research Vol. 37; no. 1; pp. 65 - 116
Main Authors Allen, Linda, Peristiani, Stavros, Tang, Yi
Format Journal Article
LanguageEnglish
Published Clemson The American Real Estate Society 01.01.2015
Taylor & Francis Ltd
Subjects
Affidavits
Asset backed securities
Balance sheets
Bank capital
Bank loans
Bank structure
Banking industry
Banking system
Banks
Capital requirements
Case dismissal
Credit risk
Delinquency
Economic crisis
Florida
Foreclosure
Foreclosures
Housing
Hypotheses
International finance
Keywords
Liens
Limbo
Loan defaults
Loans
Macroeconomics
Mortgage loans
Mortgages
Nonperforming loans
Prejudice
Probability
Property rights
Securitization
Studies
Subprime lending
U.S.A
United States > US
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Summary:Limbo loans are delinquent mortgage loans that have not progressed to resolution. We utilize a unique legal database for Florida and find no support for resolution delays from bottlenecks or bank capital constraints. Instead, the impairment of property rights can be used to help explain both the likelihood and longevity of delay. We find that the presence of the Mortgage Electronic Registration System (MERS) in both assignment and foreclosures significantly increases both the likelihood and severity of the time spent in limbo, such that a 10% increase in the presence of MERS adds around 11.5 months to the total time spent in limbo.
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SourceType-Scholarly Journals-1
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ISSN:0896-5803
2691-1175
DOI:10.1080/10835547.2015.12091410