Residential Housing and Personal Bankruptcy (Second Quarter 2009 Business Review)

*The views expressed here are those of the author and do not necessarily represent the views of the Federal Reserve bank of Philadelphia or the Federal Reserve System. 1 The economic Recovery Act of 2008, which was enacted on July 30, 2008, established the Federal housing Finance Agency (FhFA) by combining the Office of Federal housing enterprise Oversight (OFheO) and the Federal housing Finance board (FhFb). The legislation calls for OFheO and the FhFb to be abolished one year from the date of enactment. ankruptcy filings are on the rise, and millions of households have either lost their homes to foreclosure or are on the verge of losing them. One subject of debate amid this rising number of bankruptcies is how personal bankruptcy laws deal with residential housing. This subject centers on two main issues: First, how do personal bankruptcy laws affect the availability of mortgages and the terms on which borrowers obtain mortgages? Second, how do personal bankruptcy filings affect the outcome of mortgage foreclosures? in this article, Wenli li discusses these questions and examines the economic literature to shed some light on the legislative and policy debates that are likely to recur after the current crisis is over.