Getting Sick and Falling Behind: Health and the Risk of Mortgage Default and Home Foreclosure

Jason N. Houle, University of Wisconsin-Madison
Danya Keene, University of Michigan

Recent studies suggest that poor health and inadequate health care may be important predictors of mortgage default and home foreclosure. However, to date no longitudinal, national research has examined these relationships. We expand on existing work by using nationally representative longitudinal data from the NLSY-79 to examine the relationship between poor health, becoming ill and the risk of mortgage default and foreclosure among middle-aged adults. We find that the onset of chronic conditions and health limitations are significant predictors of later mortgage default, expectation of mortgage default, and home foreclosure between 2007 and 2010. We find that these associations are partially mediated by changes in family income, savings, health insurance status and employment status. From a policy perspective, the strong link between poor health and foreclosure suggests a need to reexamine the safety-nets that are available to individuals who become ill or disabled.