Is the change in third-party debt collectors' law affecting the riskiness of single-family mortgages?

Abstract

This paper performs an event study on the states in the United States of America with the most significant increase or decrease in third-party debt collector laws between 2000 and 2016 and observes whether this affects the riskiness related to single-family mortgages. This study utilizes a large panel data set of single-family mortgage loans from Fannie Mae. It employs a difference-in-difference strategy to examine the effect of change in debt collection legislation across five states and estimates the year-by-year effects. The analysis compares one law change from each of the states, Idaho, Colorado, North Dakota, Tennessee, and Connecticut. And further, compare data using the adjacent states which did not experience a law change in the two years prior and the two years after the legal changes as control variables. The findings of the study provide suggestive evidence of the effect of a legal change on the riskiness of mortgages. Still, no clear difference was observed between laws being loosened or tightened.

Date of Award	3 May 2023
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Geraldo Cerqueiro (Supervisor)