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
April 29, 2013
Economic Research Initiatives at Duke (ERID) Working Paper No. 145
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, black and Hispanic homeowners had much higher rates of delinquency and default in the downturn. These differences are not readily explained by the likelihood of receiving a subprime loan or by differential exposure to local shocks in the housing and labor market and are especially pronounced for loans originated near the peak of the boom. Our findings suggest that those black and Hispanic homeowners drawn into the market near the peak were especially vulnerable to adverse economic shocks and raise serious concerns about homeownership as a mechanism for reducing racial disparities in wealth.
Number of Pages in PDF File: 41Accepted Paper Series
Date posted: May 3, 2013
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