“Household Spatial Effects of Foreclosure Process” (job market paper)
US homeowning households tend to be less geographically mobile than households that do not own a home. However, it is unknown whether the inducement to move from a legal process that makes foreclosure more likely on the margin can lead households to make beneficial moves even under adverse circumstances. This paper documents how foreclosure process affects the outcomes of US households through location. I link mortgage and foreclosure deeds and property characteristics with residential moves of US households and their corresponding neighborhood characteristics. Variation in the foreclosure process used across US states puts observably similar households at greater risk of foreclosure in those that follow a nonjudicial (faster and cheaper for lender) rather than judicial (slower and more expensive) process. I use the resultant variation in foreclosure rates across borders in a spatial regression discontinuity design (RDD) to estimate local average treatment effects of nonjudicial foreclosure process and, incorporating two-stage least squares, of being foreclosed. Under a nonjudicial foreclosure process, households are more likely to be foreclosed (2 pp), to move out of their home (3 pp), and to undertake more distant moves (2 pp). Moves come not only from completed foreclosures but also from preventative moves by households at risk of foreclosure. Furthermore, households experience relatively greater increases in destination relative to origin tract median income ($1,000) and household income rank at age 29 of children who grew up there (0.5 percentile) under a nonjudicial rather than judicial foreclosure process. Together these results suggest that any potential long-term negative effects of foreclosure on household members are not driven by adverse changes in neighborhood characteristics.
“The Dynamics of Overdraft Fees and Incidence” (working paper with Éva Nagypál and Colin Watson) [presentation at FDIC Consumer Research Symposium]
Revenue from checking account overdraft fees has been accounting for an ever-increasing share of consumer checking account fees. We study the determinants of overdraft fees using a unique dataset of confidential supervisory information covering several large banks that contains every transaction that a fraction of the banks’ account holders undertook over an 18-month period. Fixed-effects panel regressions recover within-person variation in overdraft fees as a function of account tenure and other time-varying characteristics. Our estimates imply that, for accounts opted into overdraft coverage, overdraft fees increase by about 20% over the first year of account ownership. We find no such effect for accounts opted out. We use only months in which a consumer was eligible for overdraft, so our results cannot be attributed to gaining eligibility for overdraft. We also present novel results on the relationship between within-person variation in overdraft activity and a consumer’s overdraft limit, linked and unlinked deposit and credit account balances, measures of account activity, and average daily balances. We also provide evidence that there is persistence in monthly overdraft fees even after controlling for account activity. Results are qualitatively similar using the probability of incurring fees rather than the level of fees. Findings are robust to top-coding of outliers and to splitting the sample by overdraft intensity. We discuss possible explanations including a limited attention model in which consumer attention to overdraft is focused by opening a new account and declines thereafter.
“Intergenerational Effects of Foreclosure” (research in progress with Connor Cole)
Studies of home foreclosure have historically focused on its market consequences (e.g., delinquency or interest rates) for market participants (borrowers, lenders, servicers, etc.). However, a population outside the mortgage market remains understudied in its experience of foreclosure: the children of borrowers. This paper documents how foreclosure of parents affects the economic outcomes of children into their late twenties. We link mortgage and foreclosure deeds and property characteristics with residential moves and US administrative microdata connecting income tax filers and their dependents. We estimate local average treatment effects of foreclosure on college attendance, earnings, employment, disability, and fertility in a spatial regression discontinuity design (RDD). We also document effect heterogeneity by parental income, race, and characteristics of the neighborhood to which households relocated.
“Data Point: Checking Account Overdraft” (policy report with Nicole Kelly, Jesse Leary, and Éva Nagypál) [press release]
“Differential Access to Improved Sanitation in Nigeria” (MSc dissertation)