Subprime Mortgages, Foreclosures, and Urban Neighborhoods
Berkeley Electronic Journal of Economic Analysis & Policy, Vol. 9, No. 3, 2009
Federal Reserve Bank of Atlanta Working Paper Series No. 2009-1
39 Pages Posted: 27 Aug 2009
There are 2 versions of this paper
Subprime Mortgages, Foreclosures, and Urban Neighborhoods
Date Written: February 1, 2009
Abstract
This paper analyzes the impact of the subprime mortgage crisis on urban neighborhoods in Massachusetts. We explore the topic using a data set that matches race and income information from Home Mortgage Disclosure Act data with property-level, transaction data from Massachusetts Registry of Deeds offices. With these data, we show that much of the subprime lending in the state was concentrated in urban neighborhoods and that minority homeownerships created with subprime mortgages have proved exceptionally unstable in the face of rapid price declines. The evidence in Massachusetts suggests that subprime lending did not, as commonly believed, lead to a substantial increase in homeownership by minorities but instead generated turnover in properties owned by minority residents. Furthermore, we argue that the particularly dire foreclosure situation in urban neighborhoods actually makes it somewhat easier for policymakers to provide remedies.
Keywords: subprime, foreclosure, minority, homeownership
JEL Classification: D11, D12, G21
Suggested Citation: Suggested Citation
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