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

See all articles by Kristopher Gerardi

Kristopher Gerardi

Federal Reserve Bank of Atlanta

Paul Willen

Federal Reserve Bank of Boston - Research Department; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

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

Gerardi, Kristopher S. and Willen, Paul S., Subprime Mortgages, Foreclosures, and Urban Neighborhoods (February 1, 2009). Berkeley Electronic Journal of Economic Analysis & Policy, Vol. 9, No. 3, 2009 , Federal Reserve Bank of Atlanta Working Paper Series No. 2009-1, Available at SSRN: https://ssrn.com/abstract=1462839

Kristopher S. Gerardi

Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States
404-498-8561 (Phone)

HOME PAGE: http://sites.google.com/site/kristophergerardishomepage/

Paul S. Willen (Contact Author)

Federal Reserve Bank of Boston - Research Department ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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