Villains or Scapegoats? The Role of Subprime Borrowers in Driving the U.S. Housing Boom

48 Pages Posted: 29 Aug 2018 Last revised: 21 Feb 2019

See all articles by James Conklin

James Conklin

University of Georgia

W. Scott Frame

Federal Reserve Bank of Dallas

Kristopher Gerardi

Federal Reserve Bank of Atlanta

Haoyang Liu

Federal Reserve Bank of New York

Date Written: 2018-08-01

Abstract

An expansion in mortgage credit to subprime borrowers is widely believed to have been a principal driver of the 2002–06 U.S. house price boom. Contrary to this belief, we show that the house price and subprime booms occurred in different places. Counties with the largest home price appreciation between 2002 and 2006 had the largest declines in the share of purchase mortgages to subprime borrowers. We also document that the expansion in speculative mortgage products and underwriting fraud was not concentrated among subprime borrowers.

Keywords: mortgages, subprime, house prices, credit scores, housing boom

JEL Classification: D14, D18, D53, G21, G38

Suggested Citation

Conklin, James and Frame, W. Scott and Gerardi, Kristopher S. and Liu, Haoyang, Villains or Scapegoats? The Role of Subprime Borrowers in Driving the U.S. Housing Boom (2018-08-01). FRB Atlanta Working Paper No. 2018-10. Available at SSRN: https://ssrn.com/abstract=3240413 or http://dx.doi.org/10.29338/wp2018-10

James Conklin (Contact Author)

University of Georgia ( email )

Athens, GA 30602-6254
United States

W. Scott Frame

Federal Reserve Bank of Dallas ( email )

2200 N Pearl Street
Dallas, TX 75201
United States
214-922-6984 (Phone)

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/

Haoyang Liu

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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