Home Mortgage Research Articles

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.

Loan Delinquency Projections for COVID-19

The authors forecast the effects of COVID-19 on loan-delinquency rates under three scenarios for unemployment and house-price movements. Absent policy interventions, the model predicts peak loan-delinquency rates of 2.8 percent in the favorable scenario, 8.1 percent in the severe scenario, and 3.9 percent in the baseline scenario. The greatest reductions in delinquency are achieved through home mortgage forbearance and student loan forbearance, with fiscal transfers playing a smaller role.

Assigning Credit Union Deposits to Credit Union Branches

We describe a method to allocate U.S. credit union deposits to the credit union branch level. Credit union deposit data is only available at the aggregate firm level. Our method takes advantage of FFIEC Home Mortgage Disclosure Act (HMDA) to identify loans at the credit union branch level. We show that credit union deposits at the branch level are highly correlated with credit union loans at the branch level for 2010-2012. We then allocate aggregate firm level credit union deposits to the credit union branch level based on the proportion of total loan portfolio at each branch for 2004-2012.

The Effect of Shadow Banking on the Bank Lending Channel of Monetary Policy

I present empirical evidence that shadow banks weaken the pass through of monetary policy to the real economy by weakening the bank lending channel. I construct a novel dataset of home mortgage loan originations from the Home Mortgage Disclosure Act (HMDA) matched with county level home prices and labor market outcomes for years 2000 through 2019. I fi nd that shadow banks expand mortgage originations relative to traditional banks as the monetary policy rate increases. This effect is economically large even when controlling for loan demand by comparing shadow and traditional bank lenders within the same county. In addition, I estimate the impact of shadow bank presence on the transmission of monetary policy to the real economy by exploiting county level heterogeneity in shadow bank exposure. My results indicate that as the monetary policy rate increases counties with more exposure to shadow banking experience smaller contractions in home prices, employment, and wages relative to those with less exposure to shadow banking. These results indicate that the recent expansion in shadow mortgage banking has weakened an important channel through which monetary policy affects the real economy.

Exploring the rise of mortgage borrowing among older Americans

Between 1980 and 2015, older households in the US more than tripled the use of home mortgage debt. Rather than using owned homes as a source of imputed rent, older households are borrowing against home equity, with loan terms that exceed their expected life spans. Using several data sources, we explore the rising use of mortgages among elderly homeowners. Rising mortgage borrowing provides low-wealth older households with increased liquid assets, but it does not appear to be meaningfully associated with increases in loan defaults. This trend of elderly mortgage borrowing is not explained by increasing levels of income or cohort demographic shifts, but is linked to a rise on ownership of homes by older households in general. However, changes in subsidies associated with mortgage debt partially contribute to differential increases in mortgage use by older households.

Investing in Neighborhoods: The Mitigating Role of Home Mortgage Loans on Intimate Partner Violence.

Prior research examining how macro-level factors contribute to aggregate rates of intimate partner violence (IPV) across neighborhoods has focused almost exclusively on economic disadvantage or residential instability. Fewer studies have assessed what structural factors might ameliorate rates of domestic violence, such as economic investment. Housing investment improves communities by increasing the number of homeowners, who tend to be more committed to the neighborhood and more likely to develop strong social ties with other residents. The benefits of strong socially connected communities should extend to IPV victims, as studies have shown that female IPV victims tend to be less connected with their social environment and live in less supportive communities. This study examines the influence of external economic investment through home mortgage loans on the number of IPV incidents in a neighborhood and whether an influx of investment mitigates the negative effects of structural conditions on IPV. We examine these issues using panel data on home loan investment among neighborhoods in Cleveland, Ohio, between 1995 and 2010 to predict female and male domestic assault victimization rates. We find that the number of home purchase loans in a neighborhood has no appreciable impact on the level of IPV incidents, but as the average dollar amount of investment increases, the number of IPV incidents significantly decreases. This relationship is moderated by the neighborhood level of disadvantage: in highly disadvantaged neighborhoods, even low average dollar amounts contribute to a reduction in the number of female victims of domestic assault, but the same relationship is not apparent for male victims or in low disadvantaged neighborhoods. Our findings suggest that investment is important for disrupting the relationship between neighborhood structure and IPV, and implementing place-based strategies to encourage homeownership, particularly in disadvantaged neighborhoods, will be especially impactful.

Pengaruh Pengelolaan Pembiayaan Agunan Rumah terhadap Peningkatan Nasabah PT. Bank Syari’ah Mandiri (Persero) Kantor Cabang Pembantu Kedaton Bandar Lampung

In the concept of Shariah and conventional perbankkan is equally serves as a financial intermediary so many different products perbankkan sharia is not a product with conventional banks . The purpose of this study was to determine and analyze the effect of home mortgage financing management to increase customer at PT . Sharia Bank Mandiri ( Persero ) Branch Office Kedaton Bandar Lampung . While desaian research used in this paper is a qualitative analysis . Based on the results it can be seen that : ( 1 ) The management of home ownership through Musharaka financing at Bank Syariah Mandiri ( Persero ) Branch Office Kedaton Bandar Lampung is good enough is evident from the implementation of financing the management of home ownership that does not burden the bank's customers and always strive for improvement -Fixes lease quickly if the object is not in accordance with the wishes of the customer . ( 2 ) The management of home ownership through Ijara financing of Bank Syariah Mandiri ( Persero ) Branch Office Kedaton Bandar Lampung has done fairly well in accordance with the provisions of sharia perbankkan .

Financialization in Japan

Since the 1980s, neoliberal economic policies have promoted financialization throughout the global economy. While Japan has not been entirely unaffected by this phenomenon, its financialization is peculiar. It is certain that big businesses have been accumulating excess money, rather than reinvesting it, but financial institutions have not grown in terms of financial assets. Moreover, Japan’s financial system remains, even today, a traditional bank-based system. It is a fact that foreign investors now hold more stock in large Japanese companies than was previously the case, and consequently, they have imposed the rules of shareholder capitalism. However, in the 2000s, large Japanese companies have offered only modest increments in dividend payouts. Meanwhile, the total remuneration of the directors of those companies has been declining. Since the financial crisis of 1997–1998, big businesses in Japan have cut wages to increase profits during periods of slow economic growth. However, financial institutions have neither the will nor the capability to use their reserves. Additionally, households in Japan have avoided the option of taking out home mortgages and credit to purchase consumer goods that would have made them a part of financialization as borrowers. These events have prevented Japan from realizing full-fledged financialization. Instead, the Japanese economy grew through an expansion of exports in the 2000s; since then, under Abenomics, the old export-led model has come to an end. This does not mean, however, that Japan’s model is a replication of the American model.

A kind of non-zero sum mixed differential game of backward stochastic differential equation

This paper is concerned with a non-zero sum mixed differential game problem described by a backward stochastic differential equation. Here the term “mixed” means that this game problem contains a deterministic control v_{1} of Player 1 and a random control process v_{2} of Player 2. By virtue of the classical variational method, a necessary condition and an Arrow’s sufficient condition for the mixed stochastic differential game problem are presented. A linear–quadratic mixed differential game problem is discussed, and the corresponding Nash equilibrium point is explicitly expressed by the solution of mean-field forward–backward stochastic differential equation. The most distinguishing feature, compared with the existing literature, is that the optimal state process of the linear–quadratic game satisfies a linear mean-field backward stochastic differential equation. Finally, a home mortgage and wealth management problem is given to illustrate our theoretical results.

How Do Households Respond to Job Loss? Lessons from Multiple High-Frequency Data Sets

How do households respond to job loss, and which self-insurance channels are most important? By linking high-frequency customer data from the largest bank in Denmark with government administrative registers, we quantify a broad range of responses to job loss in a unified empirical framework. Two responses stand out: during the first 24 months after job loss, reductions in household spending account for 30% of the income loss, while lower saving in liquid assets accounts for 50%. Other response margins highlighted in the literature - spousal labor supply, private transfers, home equity extraction, mortgage refinancing, and consumer credit - are less important.

Home Location Choices and the Gender Commute Gap

Using administrative records of home mortgages in Beijing, we show that dual-income households systematically choose to buy homes that are closer to the wife’s workplace. The wife’s commute from the newly purchased home is on average 11% shorter by distance than the husband’s. We estimate a discrete home location choice model and find that households derive substantially larger disutility from the wife’s commute than from the husband’s. Through the lens of a simple collective household model, we show evidence that the gender commute gap reflects the intra-household division of labor and relative bargaining power.

Do Lenders Still Discriminate? A Robust Approach for Assessing Differences in Menus

We use a new methodology to assess mortgage pricing discrimination by race. We make four main contributions. First, we show that existing estimates of mortgage pricing differences by race can be confounded by a problem, which is the problem associated with evaluating equality in opportunity under multi-dimensional pricing. Though under-appreciated, the menu problem is broadly relevant in economic assessments of differences in opportunity given data on outcomes. Second, we provide a general methodology for resolving this menu problem based on relatively weak economic assumptions. More specifically, we use pairwise dominance relationships in mortgage pricing supplemented by restrictions on the range of plausible menus to define (1) a test statistic for equality in menus and (2) a difference in menus (DIM) metric for assessing whether one group of borrowers would prefer to switch to another group's menus. Our metrics are robust to arbitrary heterogeneity in borrower preferences across racial groups over the menu items, are sharp in terms of identification, and can be efficiently computed using methods from Optimal Transport. Third, to conduct statistical inference we devise a new procedure for hypothesis testing in the value of Optimal Transport problems based on directional differentiation. Fourth, we use our methodology to estimate mortgage pricing differentials by race on a new data set linking 2018--2019 Home Mortgage Disclosure Act (HMDA) data to Optimal Blue rate locks. We find robust evidence for mortgage pricing differentials by race, particularly among Conforming mortgage borrowers who are relatively creditworthy.

Türkiye’de Konut Sahipliği, Konut Koşulları ve Konut Kalite Endeksi

This study analyzes the rates of home ownership, mortgages, tenancy, and housing conditions in Turkey and European Union countries. Data from the Income and Living Conditions Surveys conducted between 2006 and 2015 in Turkey and the EU-28 have been used in the analysis. Home ownership rate is 70% in the EU-28 and 60% in Turkey. These results indicate a significant housing shortage to exist in Turkey, with the housing sector maintaining its vitality in the near future. The proper level of housing quality is related to quality of life. Turkey has high numbers for the highly developed housing price index. In addition to this price index, a need is found for developing a detailed housing quality index. This article develops a draft for the housing quality index based on the Turkish Statistical Institute’s (TurkStat) Income and Living Conditions Survey by utilizing a total of 16 housing variables. According to results, quality of housing in Turkey is increasing gradually every year.

The Revitalization of Ghost Town

Detroit has been nicknamed ghost town because of the urban blight caused by deindustrialization, depopulation, and abandoned buildings. There has been progress in blight removal from Detroit through Detroit Land Bank Authority, Detroit Home Mortgage Program, Nuisance Abatement Program Neighborhood Revitalization, Vacant Properties Defensive Architecture, Poverty Property Tax Exemptions, and most recent federal funding.

Bank adaptation to neighborhood change: Mortgage lending and the Community Reinvestment Act

ABSTRACT This research explores whether banks strategically leverage regulatory rules for the Community Reinvestment Act that fix a neighborhood's eligibility status over a decade based on a neighborhood's economic trajectory over that decade. Using 2004–2011 Home Mortgage Disclosure Act (HMDA) data, we find that banks approve loans more frequently in those neighborhoods that are most rapidly improving, and that this effect is stronger if the neighborhoods are CRA-eligible low- and moderate-income (LMI) tracts. We find the “moving up” CRA premium ranges in magnitude from a 2 to 13 percent reduction in the likelihood an application is not approved. These results suggest that banks learn which neighborhoods are most rapidly improving and funnel activity to those places to reduce default risk while complying with the fair lending regulation. The results imply a potential unanticipated consequence of the regulation is that it changes the distribution of resources within the target population.

The Community Reinvestment Act: What Do We Know, and What Do We Need to Know?

ABSTRACTThe Community Reinvestment Act (CRA) was enacted in 1977 to encourage depository institutions to meet the credit needs of their communities. In 2018, the Office of the Comptroller of the Currency put out an advance notice of proposed rulemaking to gather feedback on how the CRA could be modernized. The 1,485 comment letters make clear there is no consensus on what modernization means. We argue that any revision of the regulations would be more effective if it had strong grounding in facts about current CRA lending. Using 2016 Home Mortgage Disclosure Act data and 2016 Federal Financial Institutions Examination Council loan files, we assess what we know about CRA lending from existing data sources and what we could analyze if we had more data and increased transparency on the data that are already collected.

The real consequences of bank mortgage lending standards

We examine the real effects of changes in bank mortgage loan underwriting standards by combining responses to the Federal Reserve’s Senior Loan Officer Opinion Survey, application information from the Home Mortgage Disclosure Act, and local housing market measures over 1990 to 2013. Tightened standards are associated with a 1 percentage point increase in denial rates and a 5% fall in loan issuance, controlling for applicant pool changes, but no change for predominantly-securitizing banks. In areas with more exposure to banks that have tightened standards, mortgage delinquency rates, house prices, new home sales, and residential construction employment fall substantially.

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.

Frederick F.Wherry, Kristin S.Seefeldt, and AnthonyAlvarezCredit Where It's DueNew York: Russell Sage, 2019. 159 p.

It is hard to imagine life in the contemporary United States without a credit score. Renting an apartment, buying a car on installment, and often even finding a job requires a credit score. A higher credit score results in credit at more favorable terms; a borrower with poor credit score may pay as much as extra $70,000 over the life of a home mortgage of $100,000. We assume that most people have a credit score and individuals who have a low credit score have made some poor decisions in their life by not paying their credit card bills or other loans on time. Wherry and his colleagues present startling statistics. They show that an estimated 45 million adults in the United States lacked a credit score in 2010—either because they had no credit history or they had too few credit lines to be scored. The burden of being credit invisible fell most harshly on Blacks and Latinx adults (28 percent in both cases) compared to whites and Asians (16–17 percent). “Giving Credit Where Credit is due,” a mantra of modern credit justice activists, requires consensus on who deserves it and why. Should credit, like political freedom, be a fundamental right for all adults? Or is credit a privilege best granted to those who have demonstrated themselves fit to use it, or at least disciplined enough not to abuse it? Authors of Credit Where It's Due, Frederick Wherry, Professor of Sociology at Princeton; Kristin Seefeldt, Associate Professor of Social Work and Social Policy at University of Michigan; and Anthony Alvarez, Assistant Professor of Sociology at California State University, Fullerton, argue that low credit score is part and parcel of a life lived on the margins of the organized financial world and not a function of conscious individual choices. The book is based on fieldwork conducted at Mission Asset Fund (MAF) which began as a nonprofit community organization in 2007 in the Mission District of San Francisco and seeks to enhance financial inclusion for minorities, immigrants, and low-income households and to create a fair credit marketplace for everyone. It documents financial trajectories that land individuals in a credit invisible situation where they are unable to obtain credit on fair terms and traces their struggle to get out of this predicament. While the authors’ diagnosis of what lands individuals in a credit bind is fascinating, highlighting poor starting points, diverse family and life demands, and student debt as prime culprits, it is the focus on solutions that is most interesting. Authors suggest several solutions for addressing the credit conundrum. They argue that Blacks and Latinx will never be able to catch up to their white counterparts simply by working at the same jobs, engaging in the same saving and investment practices, or getting the same education. Historical evidence shows that whites inherit over ten times as much wealth as their minority counterparts which allows them to build a credit history. The only way to bridge this gap is to consciously establish an investment account for every child born to a family with less than median income. This account will provide seed capital for their future financial security. They also propose short-term loans for every family that would protect families from getting into exorbitantly priced emergency or “payday” loans. This is to be supplemented by extending safety regulations and financial education to students taking college loans to ensure they do not fall into default. Although the focus is on low income Americans, some of the ideas in the book and solutions have interesting synergies with recent discussions on financial inclusion in the economic development literature. The premise of the book is challenging and pulls it in two different directions. On the one hand, it seeks to be an academic manuscript, trying to find a niche in the broader discourse on credit and financial stability. On the other hand, its value and impact come from its close link with one specific NGO focusing on equalizing the credit landscape. It is a challenging task to blend the two in creating a cohesive narrative and at times the authors struggle with it. However, the compelling storyline of the book allows readers to ignore this tension and remain engaged throughout the reading.