Pre- and post-delinquency behavior: cross-neighborhood variation in New York City

Abstract

This study examines whether and how mortgage default risk and the resolution process of defaults interact with neighborhoods where homeowners reside. It uses a unique data that matches household information from the Center for New York City Neighborhoods (CNYCN) with a variety of census tract data. Findings suggest that loan-related triggers of mortgage distress (e.g., payment adjustment) are more significant in neighborhoods with higher price depreciation and higher vacancy rates. With respect to post-delinquency behavior, distressed homeowners residing in neighborhoods with higher house prices tend to underutilize CNYCN services, controlling for their distance to service providers. Along with strong housing market performance, the concentration of Black/African-Americans in a neighborhood is likely to contribute to less successful client outcomes.