100 Years Later, a Painful Episode Is Observed at Last

Two years ago, Saudia Muwwakkil, the director of communications for the Martin Luther King Jr. National Historic Site, invited community leaders to discuss how to mark the 100th anniversary of a 1906 race riot in which mobs of whites descended on the city's black residents. The racial strife shut down Atlanta for four days and ended with the bodies of black men hanging from trees and streetlights. But of those Ms. Muwwakkil called, almost none had heard of it

Using Bankruptcy to Reduce Foreclosures: Does Strip-Down of Mortgages Affect the Supply of Mortgage Credit?

We assess the credit market impact of allowing mortgage “strip-down” as a foreclosure-prevention measure, where strip-down reduces the principal of underwater residential mortgages to the current market value of the property for homeowners in Chapter 13 bankruptcy. Our identification is provided by a series of U.S. court decisions that introduced strip-down in parts of the U.S. and a Supreme Court ruling that abolished it. We find that the Supreme Court decision led to a small, short-term reduction in mortgage interest rates and a small, short-term increase in mortgage approval rates, but no long-term effects, and the circuit court decisions did not consistently affect mortgage terms. These results suggest that strip-down would be an effective foreclosure-prevention program, because it would have only small and transient effects on the supply of mortgage loans