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A New Look at the U.S. Foreclosure Crisis: Panel Data Evidence of Prime and Subprime Borrowers from 1997 to 2012

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  • Fernando Ferreira
  • Joseph Gyourko

Abstract

Utilizing new panel micro data on the ownership sequences of all types of borrowers from 1997-2012 leads to a reinterpretation of the U.S. foreclosure crisis as more of a prime, rather than a subprime, borrower issue. Moreover, traditional mortgage default factors associated with the economic cycle, such as negative equity, completely account for the foreclosure propensity of prime borrowers relative to all-cash owners, and for three-quarters of the analogous subprime gap. Housing traits, race, initial income, and speculators did not play a meaningful role, and initial leverage only accounts for a small variation in outcomes of prime and subprime borrowers.

Suggested Citation

  • Fernando Ferreira & Joseph Gyourko, 2015. "A New Look at the U.S. Foreclosure Crisis: Panel Data Evidence of Prime and Subprime Borrowers from 1997 to 2012," NBER Working Papers 21261, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21261
    Note: AP CF EFG IFM LS ME PE POL
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    References listed on IDEAS

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    Cited by:

    1. Manuel Adelino & Antoinette Schoar & Felipe Severino, 2015. "Loan Originations and Defaults in the Mortgage Crisis: Further Evidence," NBER Working Papers 21320, National Bureau of Economic Research, Inc.
    2. Erik Hurst, 2017. "Comment on "Dynamics of Housing Debt in the Recent Boom and Bust"," NBER Chapters,in: NBER Macroeconomics Annual 2017, volume 32, pages 312-317 National Bureau of Economic Research, Inc.
    3. Cohen, Jeffrey P. & Coughlin, Cletus C. & Yao, Vincent W., 2016. "Sales of Distressed Residential Property: What Have We Learned from Recent Research?," Review, Federal Reserve Bank of St. Louis, vol. 98(3), pages 159-188.
    4. Alejandro Justiniano & Giorgio E. Primiceri & Andrea Tambalotti, 2016. "A Simple Model of Subprime Borrowers and Credit Growth," American Economic Review, American Economic Association, vol. 106(5), pages 543-547, May.
    5. repec:kap:jrefec:v:55:y:2017:i:4:d:10.1007_s11146-016-9585-9 is not listed on IDEAS
    6. Patrick Bayer & Fernando Ferreira & Stephen L. Ross, 2018. "What Drives Racial and Ethnic Differences in High-Cost Mortgages? The Role of High-Risk Lenders," Review of Financial Studies, Society for Financial Studies, vol. 31(1), pages 175-205.
    7. Deeksha Gupta, 2018. "Too Much Skin-in-the-Game? The Effect of Mortgage Market Concentration on Credit and House Prices," 2018 Meeting Papers 512, Society for Economic Dynamics.
    8. Iqbal A. Syed & Jan De Haan, 2017. "Age, Time, Vintage, And Price Indexes: Measuring The Depreciation Pattern Of Houses," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 580-600, January.
    9. Christopher L. Foote & Lara Loewenstein & Paul S. Willen, 2016. "Cross-Sectional Patterns of Mortgage Debt during the Housing Boom: Evidence and Implications," NBER Working Papers 22985, National Bureau of Economic Research, Inc.
    10. Fuster, Andreas & Guttman-Kenney, Benedict & Haughwout, Andrew F., 2018. "Tracking and stress-testing U.S. household leverage," Economic Policy Review, Federal Reserve Bank of New York, issue 24-1, pages 35-63.
    11. Elliot Anenberg & Aurel Hizmo & Edward Kung & Raven S. Molloy, 2017. "Measuring Mortgage Credit Availability : A Frontier Estimation Approach," Finance and Economics Discussion Series 2017-101, Board of Governors of the Federal Reserve System (US).
    12. Nelson Lind, 2017. "Credit Regimes and the Seeds of Crisis," 2017 Meeting Papers 1474, Society for Economic Dynamics.

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    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • G0 - Financial Economics - - General
    • H0 - Public Economics - - General
    • J0 - Labor and Demographic Economics - - General
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General

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