IDEAS home Printed from https://ideas.repec.org/a/kap/jrefec/v45y2012i3p569-587.html
   My bibliography  Save this article

Risk versus Demographics in Subprime Mortgage Lending: Evidence from Three Connecticut Cities

Author

Listed:
  • Sara DeLoughy

Abstract

This paper analyzes patterns in subprime residential mortgage lending using 2006 Home Mortgage Act Disclosure data for the cities of Bridgeport, New Haven and Waterbury, Connecticut. The analysis applies models presented in earlier research and has the objective of assessing the relative importance of demographic versus risk factors in subprime mortgage lending decisions. Regression equations are estimated for census tracts and individual borrowers and include demographic variables and property risk measures. The results find race and ethnicity to be significant determinants of subprime lending in the borrower equations that include the full set of risk measures. Neighborhood educational levels are found to have an inverse and often significant association with subprime mortgage loans. Property risk measures present mixed results regarding their significance in subprime lending, suggesting that risk may have played less of a role in loan originations in 2006 than it did in earlier studies. Copyright Springer Science+Business Media, LLC 2012

Suggested Citation

  • Sara DeLoughy, 2012. "Risk versus Demographics in Subprime Mortgage Lending: Evidence from Three Connecticut Cities," The Journal of Real Estate Finance and Economics, Springer, vol. 45(3), pages 569-587, October.
    • Handle: RePEc:kap:jrefec:v:45:y:2012:i:3:p:569-587
    DOI: 10.1007/s11146-010-9281-0
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11146-010-9281-0
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11146-010-9281-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Paul Calem & Jonathan Hershaff & Susan Wachter, 2004. "Neighborhood patterns of subprime lending: Evidence from disparate cities," Housing Policy Debate, Taylor & Francis Journals, vol. 15(3), pages 603-622.
    2. Paul S. Calem & Kevin Gillen & Susan Wachter, 2004. "The Neighborhood Distribution of Subprime Mortgage Lending," The Journal of Real Estate Finance and Economics, Springer, vol. 29(4), pages 393-410, December.
    3. Flachaire, Emmanuel, 2005. "Bootstrapping heteroskedastic regression models: wild bootstrap vs. pairs bootstrap," Computational Statistics & Data Analysis, Elsevier, vol. 49(2), pages 361-376, April.
    4. Glenn B. Canner & Elizabeth Laderman & Wayne Passmore, 1999. "The role of specialized lenders in extending mortgages to lower-income and minority homebuyers," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 85(Nov), pages 709-726, November.
    5. Ross, Stephen L. & Turner, Margery Austin & Godfrey, Erin & Smith, Robin R., 2008. "Mortgage lending in Chicago and Los Angeles: A paired testing study of the pre-application process," Journal of Urban Economics, Elsevier, vol. 63(3), pages 902-919, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Manthos D. Delis & Panagiotis Papadopoulos, 2019. "Mortgage Lending Discrimination Across the U.S.: New Methodology and New Evidence," Journal of Financial Services Research, Springer;Western Finance Association, vol. 56(3), pages 341-368, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stephen L. Ross, 2005. "The Continuing Practice and Impact of Discrimination," Working papers 2005-19, University of Connecticut, Department of Economics, revised Jul 2006.
    2. Patrick Bayer & Fernando Ferreira & Stephen L. Ross, 2014. "Race, Ethnicity and High-Cost Mortgage Lending," NBER Working Papers 20762, National Bureau of Economic Research, Inc.
    3. Gerardi Kristopher & Willen Paul, 2009. "Subprime Mortgages, Foreclosures, and Urban Neighborhoods," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(3), pages 1-37, March.
    4. Patrick Bayer & Fernando Ferreira & Stephen L. Ross, 2018. "What Drives Racial and Ethnic Differences in High-Cost Mortgages? The Role of High-Risk Lenders," The Review of Financial Studies, Society for Financial Studies, vol. 31(1), pages 175-205.
    5. Raphael W. Bostic & Brian J. Surette, 2004. "Market Forces or CRA-induced Externalities: What Accounts for the Increase in Mortgage Lending to Lower-Income Communities?," Working Paper 8592, USC Lusk Center for Real Estate.
    6. Marsha J. Courchane & Stephen L. Ross, 2019. "Evidence and Actions on Mortgage Market Disparities: Research, Fair Lending Enforcement, and Consumer Protection," Housing Policy Debate, Taylor & Francis Journals, vol. 29(5), pages 769-794, September.
    7. Xudong An & Raphael W. Bostic, 2006. "Have the Affordable Housing Goals been a Shield against Subprime? Regulatory Incentives and the Extension of Mortgage Credit," Working Paper 8572, USC Lusk Center for Real Estate.
    8. Yonghua Zou, 2015. "Re-examining the Neighborhood Distribution of Higher Priced Mortgage Lending: Global versus Local Methods," Growth and Change, Wiley Blackwell, vol. 46(4), pages 654-674, December.
    9. Stephen L. Ross & Yuan Wang, 2022. "Mortgage Lenders and the Geographic Concentration of Foreclosures," Working Papers 2022-001, Human Capital and Economic Opportunity Working Group.
    10. Bocian, Debbie Gruenstein & Ernst, Keith S. & Li, Wei, 2008. "Race, ethnicity and subprime home loan pricing," Journal of Economics and Business, Elsevier, vol. 60(1-2), pages 110-124.
    11. Billings, Stephen B. & Johnson, Erik B., 2012. "A non-parametric test for industrial specialization," Journal of Urban Economics, Elsevier, vol. 71(3), pages 312-331.
    12. Yue Zhang & Ben Boukai, 2022. "Recycled two-stage estimation in nonlinear mixed effects regression models," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 31(3), pages 551-585, September.
    13. Béchir Bouzid, 2010. "Titrisation des emprunts hypothécaires et bulle immobilière aux États-Unis : les origines d’une débâcle," Revue d'Économie Financière, Programme National Persée, vol. 97(2), pages 101-142.
    14. J. Collins, 2011. "Mortgage Mistakes? Demographic Factors Associated with Problematic Loan Application Behaviors," Journal of Family and Economic Issues, Springer, vol. 32(4), pages 586-599, December.
    15. Xudong An & Raphael W. Bostic, 2009. "Policy incentives and the extension of mortgage credit: Increasing market discipline for subprime lending," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 28(3), pages 340-365.
    16. Carolina Laureti & Ariane Szafarz, 2016. "The price of deposit liquidity: banks versus microfinance institutions," Applied Economics Letters, Taylor & Francis Journals, vol. 23(17), pages 1244-1249, November.
    17. Kelly D. Edmiston & Roger Zalneraitis, 2007. "Rising foreclosures in the United States: a perfect storm," Economic Review, Federal Reserve Bank of Kansas City, vol. 92(Q IV), pages 115-145.
    18. Jevgenijs Steinbuks & Gregory Elliehausen, 2014. "The Economic Effects of Legal Restrictions on High-Cost Mortgages," The Journal of Real Estate Finance and Economics, Springer, vol. 49(1), pages 47-72, July.
    19. Elias Christopher J., 2015. "Percentile and Percentile-t Bootstrap Confidence Intervals: A Practical Comparison," Journal of Econometric Methods, De Gruyter, vol. 4(1), pages 153-161, January.
    20. James B. Kau & Lu Fang & Henry J. Munneke, 2019. "An Unintended Consequence of Mortgage Financing Regulation – a Racial Disparity," The Journal of Real Estate Finance and Economics, Springer, vol. 59(4), pages 549-588, November.

    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:kap:jrefec:v:45:y:2012:i:3:p:569-587. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.