New Philadelphia Fed Study Observes Positive Effects of Loan Modification Programs on Borrowers’ Financial Health

Philadelphia Fed. Community Development Studies & Education
Tuesday, October 18, 2016

Since the most recent housing crisis, many loan modification programs were developed to protect financially struggling households from foreclosure. Based on several unique loan-level data sets, a newly released Federal Reserve study reports novel empirical evidence on how homeowners manage their credit before and after receiving modifications. This study demonstrates that interventions designed to improve household balance sheets could have a direct and sizable impact on borrower financial outcomes.