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Analyzing CRA Lending During the Tsunami in Subprime Lending and Foreclosure in the Philadelphia MSA

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  • Katrin B. Anacker
  • Kristen B. Crossney

Abstract

Until the onset of the financial meltdown, independent mortgage companies (IMCs) had begun to originate an increasing share of subprime loans, a high proportion of which went into foreclosure. In this study, we compare and contrast the characteristics of neighborhoods that have high proportions of loans made by Community Reinvestment Act (CRA)-regulated institutions with those that have high proportions made by IMCs. We find that IMC-dominated neighborhoods are characterized by high proportions of Blacks/African-Americans, low average family incomes and low nominal average family income increases, an old housing stock with inexpensive homes, a low homeownership rate, high vacancy rates, and a high proportion of high-cost loans. Based on t -tests and regression analyses, we find that areas dominated by IMCs are different from neighborhoods dominated by CRA Lenders and that the proportion of people of color helps explain foreclosure rates.

Suggested Citation

  • Katrin B. Anacker & Kristen B. Crossney, 2013. "Analyzing CRA Lending During the Tsunami in Subprime Lending and Foreclosure in the Philadelphia MSA," Housing Studies, Taylor & Francis Journals, vol. 28(4), pages 529-552, June.
    • Handle: RePEc:taf:chosxx:v:28:y:2013:i:4:p:529-552
    DOI: 10.1080/02673037.2013.759181
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    References listed on IDEAS

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    1. Elizabeth Laderman & Carolina Reid, 2008. "Lending in low- and moderate-income neighborhoods in California: the performance of CRA lending during the subprime meltdown," Community Development Working Paper 2008-05, Federal Reserve Bank of San Francisco.
    2. Kristopher Gerardi & Adam Hale Shapiro & Paul S. Willen, 2007. "Subprime outcomes: risky mortgages, homeownership experiences, and foreclosures," Working Papers 07-15, Federal Reserve Bank of Boston.
    3. Christopher J. Mayer & Karen Pence, 2008. "Subprime Mortgages: What, Where, and to Whom?," NBER Working Papers 14083, National Bureau of Economic Research, Inc.
    4. Munnell, Alicia H. & Geoffrey M. B. Tootell & Lynn E. Browne & James McEneaney, 1996. "Mortgage Lending in Boston: Interpreting HMDA Data," American Economic Review, American Economic Association, vol. 86(1), pages 25-53, March.
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