Forcing banks to wait just four more months before taking a home actually helps people land higher-paying jobs.
April 2, 2026
Original Paper
Time on Your Side: Labor Market Effects of Foreclosure Delays
SSRN · 6479722
The Takeaway
Using data from a 2021 regulatory pause on foreclosures, researchers found that the 'breathing room' allowed delinquent borrowers to focus on job-hunting. Instead of just losing their homes more slowly, these people successfully switched to more productive firms and increased their labor income by up to 2.5%.
From the abstract
I study how foreclosure delays affect labor income. I exploit a 2021 CFPB servicing rule that restricted servicers from initiating foreclosure on eligible loans, delaying filings by up to four months. Using matched employer-employee payroll records linked to credit files, I estimate a difference-indifferences design comparing borrowers who became 120+ days delinquent one month before versus one month after the eligibility cutoff. Eligible borrowers' incomes rise 2-2.5%, driven by job switching a