Using a national loan level data set we examine loan default as explained by local demographic characteristics and state level legislation that regulates foreclosure procedures and predatory lending through a hierarchical linear model. We observe significant variation in the default rate across...

A national loan level data set, aggregated at the zip code is used to examine the elasticity of default relative to local demographic characteristics and state level legislation regulating foreclosure procedures and predatory lending. We also illustrate the merit of using a form of hierarchical...