Getting sick and falling behind: health and the risk of mortgage default and home foreclosure

Abstract

BACKGROUND: An emerging literature shows that mortgage strain can lead to poor health outcomes, but less work has focused on whether and how health shocks influence mortgage distress. We examine the link between changes in health status and default/foreclosure risk among older middle-aged adults. METHOD: We used National Longitudinal Study of Youth 1979 data and multivariate logistic regression models to examine the relationship between changes in health limitations and chronic conditions across survey waves and risk of mortgage default and foreclosure. RESULTS: We found that changes in health limitations and chronic conditions increased the risk of default and foreclosure between 2007 and 2010. These associations were partially mediated by changes in family income and loss of health insurance. CONCLUSIONS: From a policy perspective, the strong link between the onset of illness and foreclosure suggests a need to re-examine the safety-nets that are available to individuals who become ill or disabled.

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