Should California Foreclosure Law Serve as a Model?

Stuart Gabriel is the Arden Realty Chair, Professor of Finance and Director at the UCLA Ziman Center for Real Estate.

LOS ANGELES—California’s foreclosure prevention laws performed better than the federal government’s policy during the early 2000s financial crisis, according to a new economic letter from UCLA Ziman Center for Real Estate and the UCLA Anderson Forecast. Stuart A. Gabriel, Arden Realty Chair, professor of finance at UCLA Anderson School of Management, and director at UCLA Ziman Center; Matteo Iacoviello, chief economist of trade and financial studies section in the division of international finance, and on the board of governors of the Federal Reserve System; and Chandler Lutz, associate professor in the Department of Economics at Copenhagen Business School, took an in-depth look at how the California Foreclosure Prevention Laws performed during the crisis period, and they found that these policies reduced foreclosures by 16%, preventing 380,000 California borrowers from losing their homes. As a result of these policies, home prices increased by 6%, which created $300 billion of housing wealth. This report is the first analysis of these laws. To get a closer look inside this research, we sat down with Gabriel for an exclusive interview.

GlobeSt.com: You are the first to evaluate the foreclosure laws and the impact these laws had on the recent mortgage crisis. What motivated you to look into this issue?