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Subprime Mortgages, Foreclosures, and Urban Neighborhoods

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  • Gerardi Kristopher

    ()
    (Federal Reserve Bank of Atlanta)

  • Willen Paul

    ()
    (Federal Reserve Bank of Boston)

Abstract

This paper analyzes the impact of the subprime crisis on urban neighborhoods in Massachusetts. The topic is explored using a dataset that matches race and income information from HMDA data with property-level transaction data from Massachusetts Registry of Deeds offices. With this 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 proven exceptionally unstable in the face of rapid price declines. The evidence, in Massachusetts, suggests that subprime lending did not, as is 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.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 9 (2009)
Issue (Month): 3 (March)
Pages: 1-37

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Handle: RePEc:bpj:bejeap:v:9:y:2009:i:3:n:12

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Cited by:
  1. Adelino, Manuel & Gerardi, Kristopher & Willen, Paul S., 2013. "Why don't Lenders renegotiate more home mortgages? Redefaults, self-cures and securitization," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 835-853.
  2. Christopher Foote & Kristopher Gerardi & Lorenz Goette & Paul Willen, 2010. "Reducing Foreclosures: No Easy Answers," NBER Chapters, in: NBER Macroeconomics Annual 2009, Volume 24, pages 89-138 National Bureau of Economic Research, Inc.
  3. Doviak, Eric & MacDonald, Sean, 2011. "Who defaults on their home mortgage?," MPRA Paper 34275, University Library of Munich, Germany.
  4. Charles Towe & Chad Lawley, 2013. "The Contagion Effect of Neighboring Foreclosures," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 313-35, May.
  5. Patrick Bayer & Fernando Ferreira & Stephen L. Ross, 2013. "The Vulnerability of Minority Homeowners in the Housing Boom and Bust," NBER Working Papers 19020, National Bureau of Economic Research, Inc.
  6. Prabal Chakrabarti, 2009. "Massachusetts’ efforts to address foreclosed properties," Community Development Investment Review, Federal Reserve Bank of San Francisco, pages 65-72.
  7. Janet Currie & Erdal Tekin, 2011. "Is there a Link Between Foreclosure and Health?," NBER Working Papers 17310, National Bureau of Economic Research, Inc.
  8. Jörg Bibow, 2010. "Alternative Strategien der Budgetkonsolidierung in Österreich nach der Rezession," IMK Studies 03-2010, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

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