IDEAS home Printed from https://ideas.repec.org/a/jre/issued/v32n32010p341-376.html
   My bibliography  Save this article

Neighborhood Subprime Lending and the Performance of Community Reinvestment Mortgages

Author

Listed:
  • Lei Ding

    () (Wayne State University)

  • Roberto G. Quercia

    () (University of North Carolina-Chapel Hill)

  • Janneke Ratcliffe

    () (University of North Carolina-Chapel Hill)

Abstract

This study analyzes the spillover effect of the spatial concentration of subprime lending on the performance of recently originated community reinvestment mortgages targeting low- to moderate-income borrowers. The level of subprime lending in a census tract is found to be a significant predictor of the default and prepayment probability of the community reinvestment loans in the same neighborhoods. The results suggest that the concentration of subprime lending and the resulting clusters of foreclosed properties reduce neighborhood property values and increase price volatility. The lowered property values and the increased volatility increase the default probability of borrowers holding any loan product, including community reinvestment mortgages. This study provides new evidence concerning the negative impacts of the concentration of subprime lending in certain neighborhoods.

Suggested Citation

  • Lei Ding & Roberto G. Quercia & Janneke Ratcliffe, 2010. "Neighborhood Subprime Lending and the Performance of Community Reinvestment Mortgages," Journal of Real Estate Research, American Real Estate Society, vol. 32(3), pages 341-376.
  • Handle: RePEc:jre:issued:v:32:n:3:2010:p:341-376
    as

    Download full text from publisher

    File URL: http://pages.jh.edu/jrer/papers/pdf/past/vol32n03/05.341_376.pdf
    File Function: Full text
    Download Restriction: no

    More about this item

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jre:issued:v:32:n:3:2010:p:341-376. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (JRER Graduate Assistant/Webmaster). General contact details of provider: http://www.aresnet.org/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.