States Stepping In: The Meaning of the Foreclosure Crisis and States’ Foreclosure Prevention Laws

• In Event: 3558 - Political Culture, Trust and Civic Engagement

Abstract

At the core of the 2008 economic crisis in the United States was a collapse in the housing markets. During this turmoil, the federal government was accused on the one hand of not doing enough for homeowners and on the other hand for bailing out irresponsible borrowers. State governments, nevertheless, stepped into this fray enacting aggressive mortgage assistance programs and requiring various forms of mortgage modifications. How did this policy effort begin among the states and why were such efforts adopted by some states but not others? Policy studies focus on political structures to explain policy action. However, the cultural meaning of the problem also likely influences political responses. I collect original data on all foreclosure legislation passed from 2007 to 2011 and use computational text analysis techniques to operationalize and quantify the meaning of the crisis. I then test whether cultural meaning has an independent effect on policy action. Finding that meaning construction affects policy adoption, adjusting for other factors such as political party control of state legislatures and the extent of the housing market collapse in each state. In addition, I test whether a similar understanding of foreclosure events creates a policy diffusion pathway between states that may differ on other dimensions, like controlling political party.

Author

• Alicia Eads, Cornell University