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http://ssrn.com/abstract=2260367
 
 

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The Vulnerability of Minority Homeowners in the Housing Boom and Bust


Patrick J. Bayer


Duke University - Department of Economics; National Bureau of Economic Research (NBER)

Fernando V. Ferreira


University of Pennsylvania - The Wharton School

Stephen L. Ross


University of Connecticut - Department of Economics

January 29, 2015

Economic Research Initiatives at Duke (ERID) Working Paper No. 145

Abstract:     
This paper examines mortgage outcomes for a large, representative sample of individual home purchases and refinances linked to credit scores in seven major US markets in the recent housing boom and bust. Among those with similar credit scores and loan attributes, black and Hispanic homeowners had much higher rates of delinquency and default in the downturn. There is important heterogeneity within minorities: black and Hispanics that live in areas with lower employment rates and that have high debt to income ratios are the driving force behind the observed racial and ethnic differences in foreclosures and delinquencies. Moreover, these estimated differences are especially pronounced for loans originated near the peak of the housing boom even after controlling for the effect of origination timing on households’ equity position. These findings suggest that black and Hispanic homeowners drawn into the market near the peak were especially vulnerable to adverse economic shocks and raise concerns about homeownership as a mechanism for reducing racial disparities in wealth.

Number of Pages in PDF File: 39


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Date posted: May 3, 2013 ; Last revised: February 2, 2015

Suggested Citation

Bayer, Patrick J. and Ferreira, Fernando V. and Ross, Stephen L., The Vulnerability of Minority Homeowners in the Housing Boom and Bust (January 29, 2015). Economic Research Initiatives at Duke (ERID) Working Paper No. 145. Available at SSRN: http://ssrn.com/abstract=2260367

Contact Information

Patrick J. Bayer (Contact Author)
Duke University - Department of Economics ( email )
213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Fernando V. Ferreira
University of Pennsylvania - The Wharton School ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-7181 (Phone)
215-573-2220 (Fax)
HOME PAGE: http://real.wharton.upenn.edu/~fferreir/

Stephen L. Ross
University of Connecticut - Department of Economics ( email )
365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States
860-486-3533 (Phone)
860-486-4463 (Fax)
Feedback to SSRN


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