Extending Research on Neighborhoods and Crime: An Examination of Mortgage Fraud across Chicago Census Tracts

Abstract

The purpose of this study is to extend research on communities and crime by assessing neighborhood variation in mortgage fraud. We use proprietary data to generate a measure of mortgage fraud for 2005 through 2008 for 793 census tracts in Chicago. We estimate maximum likelihood spatial regression models to assess the impact of tract-level structural variables and lending market characteristics on mortgage fraud. We find that concentrated disadvantage, percent black, and immigrant concentration are associated with greater levels of mortgage fraud. However, the impact of these factors is largely mediated by subprime lending. In addition, we find mortgages purchased by private entities also lead to greater levels of mortgage fraud. Contrary to expectations, changing loan values are unrelated to mortgage fraud. The findings suggest the relationship between neighborhood structural characteristics and mortgage fraud is partially due to a lack of public social control in disadvantaged minority neighborhoods. Future research should build on this study and examine a wider variety of crimes than are traditionally studied at the neighborhood level.