Foreclosure externalities and Vacant Property Registration Ordinances

Arnab Biswas, Christopher Cunningham (), Kristopher Gerardi and Daniel Sexton

Journal of Urban Economics, 2021, vol. 123, issue C

Abstract: Vacant Property Registration Ordinances (VPROs) were widely adopted by local U.S. governments to compel mortgage lenders to monitor and maintain foreclosed properties. Using a border discontinuity, triple difference identification strategy, we find that enactment of VPROs in Florida more than halved the negative spillover from proximate foreclosures on arms-length sale prices. This finding is robust to various time-by-location fixed effects, different distance buffers around VPRO/non-VPRO borders, alternative foreclosure measures, and two falsification exercises. Finally, we show that foreclosed properties subject to a VPRO sell at higher prices when ultimately returned to the market, consistent with an underlying physical externality.

Keywords: Mortgage default; Foreclosure; Externality; Policy; Vacancy; Ordinance (search for similar items in EconPapers)
Date: 2021
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Working Paper: Foreclosure Externalities and Vacant Property Registration Ordinances (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:123:y:2021:i:c:s0094119021000176

DOI: 10.1016/j.jue.2021.103335

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