Mortgage Finance, Affordable Homeownership, Mortgage Default & Foreclosure, Regulation & Reform
Published Article – Peer Reviewed | March 12, 2015

Loan Modifications and Foreclosure Sales during the Financial Crisis: Consequences for Health and Stress

Housing Studies
Mark R. Lindblad, Sarah F. Riley
Research funded by Ford Foundation

Researchers find that loan modifications reduce house payment stress for lower-income delinquent mortgage borrowers.

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Few studies examine how mortgage loan modifications relate to homeowner stress and health. By keeping people in their homes and neighborhoods, loan modifications can increase residential stability, which in turn may improve well-being.

UNC Center for Community Capital researchers Mark R. Lindblad and Sarah F. Riley compared changes that occurred over a six-year period in the health and stress of lower-income homeowners who experienced a loan modification, a foreclosure sale or neither.

Lindblad and Riley find that loan modifications reduced the stress of house payments, but did not relieve the stress of home maintenance.  Beyond these property-related stressors, changes to health and stress were most closely associated with transitions in employment, income, marital status and residential quality, rather than with loan modifications or foreclosure sales.

Homeowners who experienced loan modifications and foreclosure sales had elevated stress and diminished health prior to these events.

Lindblad and Riley suggest that further refinement of loan modifications may be needed in order to reduce the strain that persists for homeowners whose mortgages have been modified.


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The UNC Center for Community Capital conducts research and policy analysis on ways to make financial services work better for more people and communities.


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