Disability and mortgage delinquency

In this study, we examine the effect of disability on mortgage delinquency. Using 2007-2017 data from the Panel Study of Income Dynamics (PSID), we study the impact of disability onex-postdelinquency rate andex-anteself-assessed delinquency risk. We find that disability substantially increases a household's likelihood of falling behind on mortgage payments. Our point estimates suggest that on average, households with disabilities are about 41.65 percent more likely to be delinquent. This effect is highly cyclical and is much stronger during economic downturns. Households with disabilities are 56.38 percent more likely to be delinquent during the 2007-2009 U.S. housing crisis and its aftermath, and whereas the effect is rather muted during the subsequent economic recovery. Additionally, we discover that households with disabilities are generally conscious of their greater vulnerability to financial troubles. Households with disabilities are 27.28 percent more likely to report possible future delinquencies. This finding suggests that in addition to increasingex-postdelinquency rates, disability can also be psychologically burdensome for many homeowners, and this effect spreads beyond households who actually fall into delinquency.