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Sought or sold? Social embeddedness and consumer decisions in the mortgage market


  • Carolina Reid


This research paper explores how mortgage market channels interacted with localized social networks to shape loan outcomes for historically disadvantaged borrowers. How did borrowers decide on their choice of lender? What loan products were they offered, and how knowledgeable were they about their loan terms? Were loans in lower-income and minority communities “sold or sought?” To answer these questions, the paper relies on in-depth interviews, local data on mortgage lending and foreclosures, and analysis of the institutions and marketing practices in two communities that represent the two faces of the mortgage crisis in California: an older, predominantly minority neighborhood with an older housing stock (Oakland), and a fast growing suburban area characterized by new construction (Stockton). This research can inform the policy debate around consumer protection regulations and fair lending laws, as well as help local practitioners such as homeownership counselors understand how borrowers access and make decisions about mortgage credit.

Suggested Citation

  • Carolina Reid, 2010. "Sought or sold? Social embeddedness and consumer decisions in the mortgage market," Community Development Investment Center Working Paper 2010-09, Federal Reserve Bank of San Francisco.
  • Handle: RePEc:fip:fedfcw:2010-09

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    References listed on IDEAS

    1. Robert B. Avery & Marsha J. Courchane & Peter M. Zorn, 2009. "The CRA within a changing financial landscape," Monograph, Federal Reserve Bank of San Francisco, number 2009tcwacf, June.
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