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The downs and ups of FHA lending: The government mortgage roller coaster ride

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  • Courchane, Marsha J.
  • Darolia, Rajeev
  • Zorn, Peter M.

Abstract

Throughout the last decade, mortgage markets experienced both a considerable decline and a considerable increase in the share served by the FHA. Concerns have grown about the solvency of the program and about the access to credit of the borrowers served by the FHA market. These concerns are due, at least in part, to the evolving distribution of loans in the FHA portfolio and uncertainty about future patterns of lending. This paper attempts to explain FHA lending patterns over the past decade, particularly the dramatic downs and ups of FHA lending. We pay particular attention to the drivers of these changes, and the implications of these changes for FHA lending, mortgage markets, and associated public policy initiatives.

Suggested Citation

  • Courchane, Marsha J. & Darolia, Rajeev & Zorn, Peter M., 2014. "The downs and ups of FHA lending: The government mortgage roller coaster ride," Journal of Housing Economics, Elsevier, vol. 24(C), pages 39-56.
    • Handle: RePEc:eee:jhouse:v:24:y:2014:i:c:p:39-56
    DOI: 10.1016/j.jhe.2014.01.002
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    References listed on IDEAS

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    1. repec:aei:rpaper:32621 is not listed on IDEAS
    2. Kerry D. Vandell, 1995. "FHA Restructuring Proposals: Alternatives and Implications," Wisconsin-Madison CULER working papers 95-09, University of Wisconsin Center for Urban Land Economic Research.
    3. John M. Quigley, 2006. "Federal credit and insurance programs: housing," Review, Federal Reserve Bank of St. Louis, vol. 88(Jul), pages 281-310.
    4. Marsha J. Courchane & Peter M. Zorn, 2012. "Differential Access to and Pricing of Home Mortgages: 2004 through 2009," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 40, pages 115-158, December.
    5. Souphala Chomsisengphet & Anthony Pennington-Cross, 2006. "The evolution of the subprime mortgage market," Review, Federal Reserve Bank of St. Louis, vol. 88(Jan), pages 31-56.
    6. Marsha J. Courchane, 2007. "The Pricing of Home Mortgage Loans to Minority Borrowers: How Much of the APR Differential Can We Explain?," Journal of Real Estate Research, American Real Estate Society, vol. 29(4), pages 399-440.
    7. Robert B. Avery & Neil Bhutta & Kenneth P. Brevoort & Glenn B. Canner & Christa N. Gibbs, 2010. "The 2008 HMDA data: the mortgage market during a turbulent year," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 96(Apr), pages 169-211, April.
    8. Joseph Nichols & Anthony Pennington-Cross & Anthony Yezer, 2004. "Borrower Self-Selection, Underwriting Costs, and Subprime Mortgage Credit Supply," The Journal of Real Estate Finance and Economics, Springer, vol. 30(2), pages 197-219, November.
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    Cited by:

    1. Marsha J. Courchane & Leonard C. Kiefer & Peter M. Zorn, 2015. "A Tale of Two Tensions: Balancing Access to Credit and Credit Risk in Mortgage Underwriting," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(4), pages 993-1034, November.
    2. Bostic, Raphael & Ellen, Ingrid Gould, 2014. "Introduction: Special issue on housing policy in the United States," Journal of Housing Economics, Elsevier, vol. 24(C), pages 1-3.
    3. Zinovyeva, E. G. & Balynskaya, N. R. & Koptyakova, S. V. & Akhmetzianova, O.O., 2020. "Analysis of the residential mortgage market in the Ural Federal District," R-Economy, Ural Federal University, Graduate School of Economics and Management, vol. 6(1), pages 5-13.

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    More about this item

    Keywords

    Mortgage markets; FHA lending;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G2 - Financial Economics - - Financial Institutions and Services
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy

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