Racial Patterns in Mortgage Lending Outcomes During and After the Subprime Boom

Haupert, Tyler

doi:10.1080/10511482.2019.1636286

Cited by 15 publications

(8 citation statements)

References 52 publications

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“…9 Examples include Carr and Megbolugbe (1993), Schill and Wachter (1993), Schill and Wachter (1994), Munnell et al (1996), Tootell (1996), Avery et al (1997), Black et al (1997), Holloway (1998), Reibel (2000), Black et al (2001), Cherian (2014), Haupert (2019), Bartlett et al (2019), Bhutta and Hizmo (2020), Willen and Zhang (2020). nation such as loan amount, borrower income, and borrower race and ethnicity.…”

Section: Data and Summary Statisticsmentioning

confidence: 99%

Mortgage Prepayment, Race, and Monetary Policy

Gerardi¹,

Willen²,

Zhang³

2020

Federal Reserve Bank of Boston Research Department Working Papers

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This paper documents large differences in mortgage prepayment behavior across racial and ethnic groups in the United States, which have significant implications for monetary policy, inequality, and pricing. Using a novel data set that combines administrative data on mortgage performance with information on race and ethnicity, we show that Black and Hispanic white borrowers have significantly lower prepayment rates compared with Non-Hispanic white borrowers, holding income, credit score, and equity constant. This gap is on the order of 50 percent and largely reflects different sensitivities to movements in market interest rates, and was particularly pronounced during QE1. Differences in prepayment speeds result in large disparities between white and minority borrowers in the distribution of rates paid on outstanding mortgages, which widens during periods of low mortgage rates and high refinance volumes. From 2010 to 2014, Black borrowers were paying 30 to 45 basis points more on average than Non-Hispanic whites despite only a small gap of about 5 basis points between the groups at the time of mortgage origination. The large differences in prepayment behavior have important pricing implications, as they suggest that minority borrowers are overpaying for their prepayment option. Our results show that inequality in mortgage markets is larger than previously realized and is exacerbated by expansionary monetary policy.

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Section: Data and Summary Statisticsmentioning

confidence: 99%

Mortgage Prepayment, Race, and Monetary Policy

Gerardi¹,

Willen²,

Zhang³

2020

Federal Reserve Bank of Boston Research Department Working Papers

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“…In other words, we do not know from these studies if neighborhoods with relatively higher mortgage denial rates are predominantly Black or another racialized group. The underlying assumption that neighborhoods with high rates of loan denial are non-white neighborhoods is supported by a recent study showing that neighborhoods with higher proportions of white residents have higher rates of loan approvals [ 69 ]. Nevertheless, nuances in the racialized housing market warrant more granular racial disaggregation.…”

Section: Discussionmentioning

confidence: 99%

Racialized Housing Discrimination and Population Health: a Scoping Review and Research Agenda

Cross¹,

Huỳnh

Bradford

et al. 2023

J Urban Health

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Racial residential segregation is considered a fundamental cause of racial health disparities, with housing discrimination as a critical driver of residential segregation. Despite this link, racial discrimination in housing is far less studied than segregation in the population health literature. As a result, we know little about how discrimination in housing is linked to health beyond its connection to segregation. Furthermore, we need to understand how health impacts differ across different types of housing discrimination. This review aims to assess the state of the population health literature on the conceptualization, measurement, and health implications of housing discrimination. We used PRISMA guidelines for scoping reviews and presented the data on 32 articles that met our inclusion criteria published before January 1, 2022. Nearly half of the articles do not define housing discrimination explicitly. Additionally, there is considerable variation in how housing discrimination is operationalized across studies. Compared to studies using administrative data for housing discrimination exposures, studies using survey data were more likely to report a detrimental association with health outcomes. Synthesizing and comparing the results of these studies helps bridge methodological approaches to this research. Our review helps inform the debate on how racism impacts population health. Given the changing nature of racial discrimination over time and place, we discuss how population health researchers can approach studying various forms of housing discrimination.

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“…As such, the housing collapse of the Great Recession had a disproportionate impact on communities of color, as they faced higher foreclosure rates, mortgage debt, and negative equity (owing more on a home than it is worth) compared to white communities (Amromin and McGranahan 2015; Anacker and Carr 2011; Anacker, Carr, and Pradhan 2012; Bayer, Ferreira, and Ross 2016; Faber and Ellen 2016; Massey et al 2016). In the years following the Great Recession, the volume of high‐cost loans has begun to rise once again (Haupert 2019; Loya and Flippen 2020), thus requiring a re‐evaluation of neighborhood racial inequality in the mortgage market.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

“…During the housing boom of the early 2000s, subprime loans accounted for as much as 50 percent of homeownership growth in minority communities, which left these neighborhoods particularly vulnerable during the Great Recession (Rugh, Albright, and Massey 2015a; Williams, Nesiba, and McConnell 2005). While mortgage lending has steadily increased since the Great Recession (Estenssoro and Cissi 2015), lending rates in minority communities remain lower compared to white communities (Haupert 2019, 2020; Loya and Flippen 2020).…”

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confidence: 99%

Differential Access in Mortgage Credit: The Role of Neighborhood Spatial and Racial Stratification

Loya

2023

Rural Sociology

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Inequality in homeownership is a major component of ethno-racial stratification. Previous studies demonstrate large ethnoracial differences in access and outcomes throughout the home buying process at both the individual and neighborhood levels. An underlying assumption in these studies is that neighborhood ethno-racial disparities in lending are similar across neighborhood spatial types. However, mortgage lending disparities are unclear when examining the neighborhood's racial composition across urban, suburban, and rural communities. This paper draws on annual data from the American Housing Survey and the Home Mortgage Disclosure Act (HMDA) from 2018 and 2019 to assess loan outcome disparities by neighborhood type and racial composition. I show that applicant disparities in loan outcomes vary when factoring the neighborhood's spatial type and racial composition. Borrowers seeking a mortgage in predominantly minority rural communities are more likely to be denied a mortgage than borrowers applying across all other neighborhood type and racial composition. The trends for urban communities are similar to suburban communities across adverse loan outcomes. When comparing the community's racial composition and neighborhood type, the observed lending pattern provides evidence of constrained mortgage access in rural areas, especially among minority rural communities.Homeownership is a major component of financial stability and asset growth for most Americans, especially for minorities. Unequal access to homeownership across ethno-racial groups is a significant contributor to asset inequality (Oliver and Shapiro 2006), as minorities are unable to take advantage of the tax incentives that subsidize homeownership and increase wealth accumulation (Prasad 2012; Quinn 2019). In addition to economic benefits, owning a home is associated with positive neighborhood attributes such as lower crime rates, better public schools, and increased social networks (Charles 2003;Massey 2005;Sharkey and Faber 2014;Yinger 1998). Unequal access to homeownership remains for minorities, despite anti-discrimination laws. The homeownership rate in 2020 was about 74 percent for non-Hispanic whites (hereafter "whites"), 60 percent for Asians, and only 50 percent and 45 percent for Hispanics (hereafter "Latinos") and non-Hispanic blacks (hereafter "blacks") (United States Census Bureau 2021).

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Racial Patterns in Mortgage Lending Outcomes During and After the Subprime Boom

Cited by 15 publications

References 52 publications

Mortgage Prepayment, Race, and Monetary Policy

Mortgage Prepayment, Race, and Monetary Policy

Racialized Housing Discrimination and Population Health: a Scoping Review and Research Agenda

Differential Access in Mortgage Credit: The Role of Neighborhood Spatial and Racial Stratification

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