Is the FHA Creating Sustainable Homeownership?

36 Pages Posted: 26 Oct 2015

See all articles by Andrew Caplin

Andrew Caplin

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Joseph S. Tracy

National Bureau of Economic Research (NBER); Federal Reserve Bank of Dallas

Anna Cororaton

Southern Methodist University (SMU) - Finance Department

Multiple version iconThere are 2 versions of this paper

Date Written: Winter 2015

Abstract

We produce first estimates of the sustainability of homeownership for recent Federal Housing Administration (FHA) borrowers. Unfortunately, the FHA does not produce its own statistics on sustainability. Neither does it permit researchers access to its data on internal refinances. This imposes significant barriers to entry for researchers who wish to track FHA borrower performance over time. We carefully construct the required tracking data to overcome this barrier. We forecast that no more than 75% of the 2007–2009 vintages of FHA borrowers will be able to successfully exit the FHA system. Our work raises questions about FHA's role, its accounting and its accountability.

Suggested Citation

Caplin, Andrew and Tracy, Joseph and Cororaton, Anna, Is the FHA Creating Sustainable Homeownership? (Winter 2015). Real Estate Economics, Vol. 43, Issue 4, pp. 957-992, 2015. Available at SSRN: https://ssrn.com/abstract=2679169 or http://dx.doi.org/10.1111/1540-6229.12106

Andrew Caplin (Contact Author)

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National Bureau of Economic Research (NBER)

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Joseph Tracy

National Bureau of Economic Research (NBER) ( email )

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Federal Reserve Bank of Dallas ( email )

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Anna Cororaton

Southern Methodist University (SMU) - Finance Department ( email )

United States

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