Home Mortgage Lending Research Articles

Home Mortgage Lending and Neighborhood Mental Health: A Spatial Econometric Analysis of 18 U.S. Metropolitan Statistical Areas.

This study investigates the relationship between home mortgages and neighborhood mental health across the 18 largest metropolitan statistical areas (MSAs) in the United States. Home mortgages, a primary avenue to homeownership, contribute to housing security and stability. Moreover, their issuance reflects local investment and potential improvements in the built environment, hypothesized to positively influence community mental well-being. Using census tract-level data from multiple sources, we employed a spatial econometric approach, specifically spatial error modeling, to account for spatial dependency and estimate the association between home mortgage lending (2011 to 2020) and the prevalence of self-reported poor mental health in 2020. Our findings indicate a statistically significant negative association between mortgage issuance and self-reported poor mental health across all 18 MSAs, suggesting that increased mortgage lending is associated with improved neighborhood mental health. Comparisons between standard linear models and spatial error models highlight the influence of unmeasured, spatially correlated factors on neighborhood mental health outcomes. This study underscores mortgage lending as a crucial factor in community well-being and emphasizes the necessity of addressing spatial dependency in neighborhood health studies for accurate estimations. The findings offer valuable insights for researchers and policymakers aiming to enhance community mental health and address health disparities through informed housing policies.

Walking the walk? Bank ESG disclosures and home mortgage lending

We show that banks with high environmental, social, and governance (ESG) ratings issue fewer mortgages in poor localities—in number and dollar amount—than banks with low ESG ratings. This lending disparity happens at both the county and census tract level, worsens in disaster areas of severe hurricane strikes, is robust to alternative ESG ratings (including using only the social (S) component), and cannot be explained by banks’ differential deposit networks. We find no difference in mortgage default rates between high- and low-ESG banks, rejecting an alternative explanation based on differential credit screening quality. We report a complementary, not substitution, relation between high-ESG banks’ mortgage lending and their community development investments (like affordable housing projects) in poor localities. Loan-application-level analyses confirm that high-ESG banks are more likely than low-ESG banks to reject mortgage loans in poor neighborhoods. The evidence hints at social wash: banks deploy prosocial rhetoric and symbolic actions while not lending much in disadvantaged communities, the social function they arguably ought to perform. Community Reinvestment Act (CRA) examinations partially undo the social wash effect.

Home price growth and minority access to mortgage credit

Home price growth and minority access to mortgage credit

Home mortgage discrimination and incidence of triple-negative and Luminal A breast cancer among non-Hispanic Black and non-Hispanic White females in California, 2006\u20132015

PurposeIn the United States, Black females are burdened by more aggressive subtypes and increased mortality from breast cancer compared to non-Hispanic (NH) White females. Institutional racism may contribute to these inequities. We aimed to characterize the association between home mortgage discrimination, a novel measure of institutional racism, and incidence of Luminal A and triple-negative breast cancer (TNBC) subtypes among NH Black and NH White females in California metropolitan areas.MethodsWe merged data from the California Cancer Registry on females aged 20 + diagnosed with primary invasive breast cancer between 2006 and 2015 with a census tract-level index of home mortgage lending bias measuring the odds of mortgage loan denial for Black versus White applicants, generated from the 2007–2013 Home Mortgage Disclosure Act database. Poisson regression estimated cross-sectional associations of census tract-level racial bias in mortgage lending with race/ethnicity- and Luminal A and TNBC-specific incidence rate ratios, adjusting for neighborhood confounders.ResultsWe identified n = 102,853 cases of Luminal A and n = 15,528 cases of TNBC over the study period. Compared to NH Whites, NH Black females had higher rates of TNBC, lower rates of Luminal A breast cancer, and lived in census tracts with less racial bias in home mortgage lending. There was no evidence of association between neighborhood racial bias in mortgage lending at the time of diagnosis and either subtype among either racial/ethnic group.ConclusionFuture research should incorporate residential history data with measures of institutional racism to improve estimation and inform policy interventions.

Lender Heterogeneity in Home Mortgage Lending Evidence from Hmda Data in Context of the Covid-19 Pandemic

Lender Heterogeneity in Home Mortgage Lending Evidence from Hmda Data in Context of the Covid-19 Pandemic

Влияние новой системы финансирования проектов с использованием эскроу-счетов на строительный рынок

В данной статье автор исследует состояние рынка кредитования ипотечного жилья в Российской Федерации за период с 2008 по начало 2021 года и раскрывает динамику роста и спада объемов рынка в зависимости от различных условий, а также проводит анализ действий государства и банковской сферы для выхода из кризисных ситуаций с 2015 по 2020 год и показывает, что за период от 2008-2021г.г. ипотечное кредитование жилья набрало значительные обороты. Это связано, во-первых, с ростом доходов определённых слоев населения, во-вторых - со значительным снижением процентной ставки (от 22% до 6,5%), в-третьих, с развитием банковской структуры и ипотечных предложений, а также качества обслуживания. При этом, рост рынка жилья за этот период времени не был прямолинейным в связи с тем, что пришлось пережить два крупных кризиса в 2015 и 2020 годах, значительно отбросивших его назад. Но государственный комплекс мер, в частности, государственная льготная программа поддержки ипотечного кредитования позволил рынку жилья и рынку ипотечного кредитования не только восстановить свои позиции, но и показать значительные тенденции к росту. Автор делает вывод, что заметное снижение процентной ставки по кредитам в обеих кризисных ситуациях было связано с вмешательством государственной программы поддержки ипотечного кредитования. Даже после приостановления данной программы возврата к докризисному уровню ставок не наблюдалось, так как банки продолжали следовать установившимся условиям кредитования. In this article, the author examines the state of the mortgage lending market in the Russian Federation for the period from 2008 to early 2021 and discusses the dynamics of growth and decline in market volumes depending on various conditions. Also the author s analyzes the government and the banking sector’s decisions to overcome crisis in the periods from 2015 to 2020. The article shows that for the period from 20082020 home mortgage lending has gained significant momentum. This happened firstly due to an increase in the income of certain segments of the population, secondly due to a significant decrease in the interest rate (from 22% to 6.5%), and finally due to the development of the banking structure and mortgage offers, as well as the quality of service. On the other hand the growth of the housing market over this period was not straightforward due to the fact that it had to go through two major crises in 2015 and 2020, which set it back significantly. However, the government realized variety of measures, one of which was the state support program to encourage mortgage lending, which allowed the housing market not only to recover its original size, but also to show significant growth dynamics. The author concludes that a noticeable decrease in the interest rate on loans in both crisis periods was related to the intervention of the state programs to support mortgage lending. Also, even after the suspension of the programs, no significant return to the pre-crisis level of rates was happening, as banks continued to follow the established lending conditions. This helped to keep gained momentum.

Influence of Socio-Economic Factors on the Development of the Home Mortgage Lending Market: The Case of the Vologda Region

Introduction. Mortgage lending plays an important role both for the banking system and for the country’s economy as a whole. In addition to the main function of providing people with comfortable housing, mortgage system development stimulates various areas of the country's economy and creates conditions conducive for investment. The purpose of the paper is to single out the factors that have a negative impact on the home mortgage lending market on the basis of the case study of the Vologda Region. Materials and methods. The study was carried out on the basis of the statistical database of the Central Bank of the Russian Federation, data from an integrated housing development institution DOM.RF and the territorial body of the Federal State Statistics Service in the Vologda Region, as well as the Numbeo database ratings. Methods of comparison and observation, analysis and synthesis were used to study the statistics of the main indicators of the home mortgage lending market. Results. The main factors influencing the home mortgage lending market have been identified: high loan interest rates, low wages (insolvency of the client), an increase in overdue debts, high prices in the housing market, etc. The author has put forward recommendations for the development of the home mortgage lending market. Discussion and Сonclusion. The study has shown that the mortgage market in the Vologda Region has considerable growth potential and that credit institutions should work more carefully with clients, which will help to reduce overdue debts. The research materials may be useful to researchers exploring the economic issue under consideration, as well as to commercial banks, regional and local authorities that can contribute to the development of mortgage lending.

Walking the Walk? Bank ESG Disclosures and Home Mortgage Lending

We show that banks with high environmental, social, and governance (ESG) ratings issue fewer mortgages in poor localities—in number and dollar amount—than banks with low ESG ratings. This lending disparity is observed at both the county and census tract level and worsens in disaster areas of severe hurricane strikes. Additional tests indicate no difference in mortgage default rates between high- and low-ESG banks, rejecting an alternative explanation based on differential credit screening quality. The evidence hints at social wash: banks deploy prosocial rhetoric and symbolic actions while not lending much in disadvantaged communities, the social function they arguably ought to perform. Community Reinvestment Act (CRA) examinations partially undo the social wash effect.

Collateral Damage: The Impact of Foreclosures on New Home Mortgage Lending in the 1930s

The Great Depression of the 1930s involved a severe disruption in the supply of home mortgage credit. This paper empirically identifies a mechanism lying behind this credit crunch: the impairment of lenders’ balance sheets by illiquid foreclosed real estate. With data on hundreds of building and loans (B&Ls), the leading mortgage lenders in this period, we find that the overhang of foreclosed real estate explains about 30 percent of the drop in new lending between 1930 and 1935.

The Higher Cost of Being African-American or Latino: Subprime Home Mortgage Lending in New York City, 2004-2005

The recent turmoil in the financial markets caused by rising default rates on subprime residential home mortgages should not obscure that several studies have shown that African-Americans, Latinos, and residents of predominantly minority neighborhoods receive a disproportionately high percentage of subprime loans. The subprime lending crisis should also not obscure the fact that they have also received a disproportionately low percentage of all home mortgage loans. This report uses data made public pursuant to the Home Mortgage Disclosure Act (HMDA) to examine home mortgage lending in New York City in 2004 and 2005 to determine whether African-Americans, Latinos, and residents of predominantly minority neighborhoods received their share of home mortgage loans and whether they paid more for the loans they got. The report reaches several conclusions. The most important conclusion is that in New York City in 2005, African-Americans, Latinos, and residents of predominantly minority neighborhoods received significantly higher percentages of subprime HMDA and home purchase loans than whites and residents of predominantly white neighborhoods. Although the HMDA data that this report uses do not contain enough information about the creditworthiness of individual borrowers to determine whether these disparities are the result of illegal discrimination, the disparities in some cases are so stark that they beg for government enforcement agencies who have access to information about borrower creditworthiness to investigate individual lenders further and they invite private parties to commence litigation against lenders through which they can gain access to this information.

СУЧАСНИЙ СТАН І ОСОБЛИВОСТІ ІПОТЕЧНОГО КРЕДИТУВАННЯ В РЕСПУБЛІЦІ КАЗАХСТАН

Formulation of the problem. The development of mortgage lending brings significant benefits to the state. First of all, it helps to solve the housing problem, which is important from the point of view of social policy. This encourages citizens' own initiative. In addition, domestic investment - savings of the populapopulation, money of institutional investors - is involved in lending. The purpose of the article is to reflect the current state and features of mortgage lending in the Republic of Kazakhstan (Kazakhstan). The subject of the research is mortgage relations regarding housing lending in the Republic of Kazakhstan. Methods used in the research: analysis and synthesis, induction and deduction, logical and historical method, scientific abstraction and statistical comparisons. The hypothesis of the research is to substantiate the value of the mortgage to improve the stability and efficiency of the banking system of the country. Secured loans are more secure for banks, because when a loan is not repaid, the bank pledges and repays its funds. Statement main material of the research. In the Republic of Kazakhstan, there is an increase in loans granted to households by second-tier banks for the purchase of housing. Currently, mortgage lending in Kazakhstan is a real opportunity to buy real estate for many working Kazakhstani people with a stable income. Especially in view of the fact that recently, in all mortgage companies, the mandatory first deposit has been reduced from 30% to 10% - 15% of the cost of housing, the loan term has been increased from 3 to 20 years, and the interest rate has decreased from 24 % (2001) to 8% (2018). Originality and practical significance of the research. The proposed measures will provide additional impetus for the revitalization of the Mortgage Lending Program and accelerate the implementation of the President's instructions to provide affordable housing for citizens. Conclusions of the research. In the short term, the massive introduction of a home mortgage lending system will cause an increase in housing demand. Due to the inelastic demand in the housing market in the short term, it is natural that such a situation will lead to an increase in housing prices. The role of the state is to gradually introduce mortgage lending and, at the same time, to systematically expand the housing market by supporting the construction of new homes and creating adequate demand.

Changes in Personal Bankruptcy Protection Laws: The Impact to Home Mortgage Lending

In the U.S., individuals who file for bankruptcy can protect a certain amount of property from creditor liquidation during the debt settlement process. Our analysis exploits changes in these laws to determine the impact on home mortgage lending. We find that the additional debtor protection reduces the likelihood of denial for home purchases and loan applications that are secured by a first lien. However, the denial rate of non-first lien purchases and home improvement loans increases as a result of higher exemption limits. We also find that applications in each affected census tract increase, leading to more approvals, loan issuance, and denials as a result of each change.

Mortgage as an Available Source of Credit Resources for Investment Financing in 2019

The subject of the researchis the availability of mortgage as a credit resource for investment funding. The relevance of the problem is due to the development of the mortgage credit lending in the country. The policy of the Central Bank of Russia (CBR) and the Russian Government aimed at combating inflation and planned reduction of the key rate created favorable conditions for establishing acceptable bank rates on mortgage loans, which significantly raised the mortgage demand over the past few years. The research shows that Russian commercial banks have reduced mortgage rates and are offering refunding of previously issued mortgage loans, which demonstrates the confidence of the banking sector in the government and economic stability at the macro level. At the same time, the easy access to home mortgage lending can lead to a “financial bubble” problem on the Russian banking market and, moreover, to deterioration of the borrowers’ solvency, and, therefore, loan default.The purpose of the researchwas to examine the current affordability of mortgage as a source of credit resources for investment funding and develop recommendations for improving this process. The paperconcludesthat the government policy of economic and financial stabilization through inflation combating measures and maintaining the key rate by the CBR at the level acceptable for economic growth should be continued. At the same time, the transition from the participation finance to the project-tied system of housing construction financing can possibly increase the loan interest burden on developers and affect the price per square meter for the final buyer. The main factors contributing to the reduction of mortgage rates are the planned reduction of the key rate by the CBR and low inflation rates, the program of the Government subsidies to the mortgage market as well as the increased supply of low-income housing by developers.

Choosing Corporations Over Consumers: The Financial Choice Act of 2017 and the CFPB

The Consumer Financial Protection Bureau (CFPB) is the U.S. Government’s primary regulator and civil law enforcement agency governing consumer lending, payment systems, debt collection, and other consumer financial services. Created in the wake of the financial crisis, Congress tasked the agency with stopping deceptive, unfair, and abusive consumer finance. However, Congress is currently considering legislation which would significantly change the CFPB’s law enforcement authorities. This Article analyzes the proposed Financial Choice Act of 2017 which would rename the CFPB, and eliminate many of the CFPB’s law enforcement powers. If the Financial Choice Act were the law of the United States from 2012 to 2016, how would the CFPB’s enforcement track record have changed? Drawing upon pleadings, consent orders, settlement agreements, press releases, and other public documents, this Article presents an empirical study of every publicly announced CFPB enforcement case to determine what law enforcement cases and awards would have been eliminated had the bill been law. Among the study’s findings, had the Financial Choice Act had been adopted in 2012 it would have eliminated: • Over 91 percent of consumer restitution for illegal home mortgage lending practices, amounting to $2.7 billion dollars; Over 94 percent of consumer restitution for illegal credit card practices amounting to $6.8 billion dollars; and Every single case addressing illegal practices in the “payday” and car title lending industry. The study concludes that the Financial Choice Act of 2017 will, if enacted, seriously weaken the CFPB’s law enforcement program.

The effect of holding company affiliation on bank risk and the 2008 financial crisis

PurposeThe organizational form of financial institutions is related to their level of risk, leverage, liquidity and capitalization. High level of risk and leverage and lower levels of liquidity and capitalization are considered to be the root causes of the 2008 financial crisis. The purpose of this paper is to investigate if banks affiliated to holding company structure contributed more to the root causes of crisis than unaffiliated banks.Design/methodology/approachThe paper isolates the effect of holding company association by restricting the sample to one-bank holding companies and individual banks. A comparative analysis of independent and holding company-affiliated banks is performed. Univariate analysis and multivariate regressions are used to compare the risk, leverage, liquidity and capitalization of affiliated and independent banks.FindingsThe paper finds that holding company affiliation is linked to several root causes of the 2008 financial crisis. Specifically, holding company affiliation results in higher levels of home mortgage loans underwritten and underperforming, higher leverage, lower liquidity and lower capitalization for the subsidiary bank.Practical implicationsThe paper demonstrates that affiliated banks use their higher leveraged positions to engage in riskier home mortgage lending, sacrificing both liquidity and capital adequacy. These findings can help policy makers to focus on the group of banks that are part of holding company affiliation and implement such policies and regulations so as to avoid any re-occurrence of financial crisis.Originality/valueThis paper is the first to link the structural differences in banks to the root causes of financial crisis and to isolate the effect of holding company affiliation through sample selection. The paper will be valued to other researchers who try to isolate the effect of holding company affiliation and those studying the causes of the financial crisis of 2008.

Experienced Discrimination in Home Mortgage Lending: A Case of Hospital Employees in Northern Italy

This article proposes a framework for the analysis of experienced discrimination in home mortgages. It addresses the problem of home mortgage lending discrimination in one of the richest areas of northern Italy. Employees of a local hospital were interviewed to study their perception (or experience) of discriminatory behavior related to home financing. The analysis follows two steps. The first evaluates self-selection (the probability that individuals apply) and the second focuses on the likelihood that applications are accepted by the bank. Findings show that discrimination is likely to appear when the applicant’s nationality is considered. In addition to its findings, the study (a) provides an original econometric model on a two-step procedure to test perceived discrimination and (b) suggests a method and approach that may constitute a point of reference for those willing to study perceived discrimination.

Credit Risk Modeling of Residential Mortgage Lending in Russia

This paper analyzes the problems of credit risk modeling of residential mortgage lending in Russia. Using unique mortgage loan and macro data from a regional branch of the Agency of Home Mortgage Lending (2008-2012), we find that borrower and mortgage loan characteristics affect the loan performance and play an important role in predicting default as well as a macroeconomic situation. On the residential mortgage market, borrowers with undeclared income have the lowest probability of default, mainly explained by the difference in declared and real income. Obtained results are robust under parametric and semiparametric specifications with correction for selectivity bias.

МЕХАНИЗМЫ ГОСУДАРСТВЕННОГО УПРАВЛЕНИЯ ЖИЛИЩНОЙ СФЕРОЙ В РОССИИ

This article examines the mix of policy instruments used by the Russian government in the sphere of housing development. The analysis is based on an influential framework for the study of public management and policy design - the “tools of government” - which distinguishes nodality (information), authority, treasure, and organization-based tools. The article also utilizes a distinction between “substantive” and “procedural” tools. It first surveys substantive tools used in Russian housing policy, including the Agency for Home Mortgage Lending, two state foundations for housing construction and rehabilitation, and mortgage lending banks, among others. Discussion then moves to the use of procedural tools, such as consultations between the government and business associations of the construction industry, and the organization of professional forums and conferences. The third section explains the use of the specific “mix” of government policy tools with reference to the structure of the “policy subsystem,” that is, the community of actors involved in this policy field. The conclusion relates the use of government instruments in Russia - predominantly treasure and authority for substantive tools, and organization and authority for procedural tools - to the use of similar instruments by other governments.

NEIGHBORHOOD HOUSING INVESTMENTS AND VIOLENT CRIME IN SEATTLE, 1981–2007*

Despite significant advances in the study of neighborhoods and crime, criminologists have paid surprisingly less attention to the extralocal forces that shape violence. To address this issue, we draw on an emerging body of work that stresses the role of home mortgage lending—a resource secured via interaction with external actors—in reducing neighborhood violence and extend it by addressing concerns that the lending–violence relationship is spurious and confounded by simultaneity. We explore the longitudinal relationship between residential mortgage lending and violence in Seattle with a pooled time series of 118 census tracts over 27 years, and we instrument our endogenous predictors (home mortgage lending and violent crime) with changes in their levels from prior periods. Employing Arellano–Bond difference models, we assess both the effect of mortgage lending on violent crime as well as the effect of violent crime levels on mortgage activity. We find that infusions of home mortgage lending yield reductions in subsequent violent crime; yet the impact of violent crime on subsequent lending is not significant. Results underscore the importance of incorporating external forces such as home mortgage lending into explanations of neighborhood violence.

Home-Mortgage Lending Trends in New England in 2010

This brief analysis of home-mortgage lending trends in New England provides information on lending activity from 2006 to 2010. The report includes data on originations, denial rates, and percent of high-priced loans by loan purpose (refinance and home-purchase) and type of loan (conventional and non-conventional loans). The paper highlights differences by state, income, and race/ethnicity. Mortgage information in New England shows that home-purchase originations in the region have continued to decline over the past four years, dropping 44 percent from 2006 to 2010. Home-purchase loans plummeted at a much higher rate among black and Latino borrowers than among white and Asian borrowers. All the New England states, except Rhode Island, showed a higher number of refinance originations in 2010 than in 2006, despite a year-over-year drop in 2010. Interestingly, low- and moderate-income (LMI) borrowers experienced a less dramatic fall in home-purchase originations than did non-LMI borrowers from 2006 to 2010. However, LMI census tracts were more severely affected than non-LMI census tracts. The report also shows that denial rates in New England declined slightly in 2010, reaching the lowest level in the past five years. In 2010, loans insured by the Federal Housing Administration accounted for a third of home-purchase originations in the region and for two-thirds of home-purchase loans to blacks and Latinos.