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The role of non-owner-occupied homes in the current housing and foreclosure cycle

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  • Breck L. Robinson
  • Richard M. Todd

Abstract

Non-occupant homeowners differ from owner occupants in that they tend to have lower-risk credit characteristics, such as higher credit scores, but may also have weaker incentives to maintain mortgage payments when housing values fall. During the recent housing boom, the share of mortgage borrowing by non-occupant owners was relatively high in states where home values appreciated relatively rapidly. After the housing boom, foreclosures on non-occupant mortgages in several Midwestern and Northeastern states reflected primarily a high rate of foreclosure per mortgage, not a high volume of mortgages to non-occupants. The reverse held true in some coastal and mountain states. Nevada and Florida have experienced the greatest impact overall, because they have both a high volume of mortgages to non-occupant owners and a high rate of foreclosure on those mortgages.

Suggested Citation

  • Breck L. Robinson & Richard M. Todd, 2010. "The role of non-owner-occupied homes in the current housing and foreclosure cycle," Working Paper 10-11, Federal Reserve Bank of Richmond.
    • Handle: RePEc:fip:fedrwp:10-11
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    References listed on IDEAS

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    1. 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.
    2. Haughwout, Andrew & Peach, Richard & Tracy, Joseph, 2008. "Juvenile delinquent mortgages: Bad credit or bad economy?," Journal of Urban Economics, Elsevier, vol. 64(2), pages 246-257, September.
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    Keywords

    Housing; Mortgages;

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