Abstract
Loan modifications and foreclosure sales are two ways mortgage servicers can respond when homeowners fall behind on house payments. We investigate the consequences of these events for health and stress by linking longitudinal survey data with administrative mortgage performance data that identify those survey participants who experienced a foreclosure sale, a loan modification, or neither. We find that between 2008 and 2013, loan modifications and foreclosure sales were both associated with a reduction in the stress of house payments, while foreclosure sales alone were associated with a reduction in the stress of home maintenance. Beyond these property-related stressors, the changes in survey participants' self-reported sense-of-control and mental, physical, and general health are most associated with transitions in employment, income, marital status, and residential quality rather than with loan modifications or foreclosure sales. These findings run counter to prevailing research, yet they inform the debate over how to address problems that arise when homeowners become delinquent on mortgages.
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