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Do the GSEs Matter to Low-Income Housing Markets? An Assessment of the Effects of the GSE Loan Purchase Goals on California Housing Outcomes (Revised)

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  • Raphael W. Bostic
  • Stuart A. Gabriel

Abstract

This study evaluates the effects of GSE mortgage purchase activity on homeownership and housingconditions among communities that are the focus of the 1992 GSE Act and the HUD affordablehousing goals. To identify GSE effects, the test framework exploits differences in the definition oflower-income neighborhoods under the 1992 GSE Act, which establishes regulation for the GSEs, andthe 1977 Community Reinvestment Act, which lays out regulation for Federally-insured depositoryinstitutions. Research findings indicate limited direct effects of GSE loan purchase activity on localhousing markets. However, results do evidence a threshold level of GSE activity below whichsignificantly adverse local housing market outcomes are recorded. These findings suggest theimportance of GSE home loan purchases among low-income neighborhoods in efforts to achieve theGSE and HUD affordable housing goals.

Suggested Citation

  • Raphael W. Bostic & Stuart A. Gabriel, 2005. "Do the GSEs Matter to Low-Income Housing Markets? An Assessment of the Effects of the GSE Loan Purchase Goals on California Housing Outcomes (Revised)," Working Paper 8578, USC Lusk Center for Real Estate.
    • Handle: RePEc:luk:wpaper:8578
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    File URL: http://lusk.usc.edu/sites/default/files/working_papers/wp_2005-1001.pdf
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    References listed on IDEAS

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    1. Glenn B. Canner & Wayne Passmore & Brian J. Surette, 1996. "Distribution of Credit Risk Among Providers of Mortgages to Lower-Income and Minority Homebuyers," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 82(12), pages .1077-1102, December.
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    Cited by:

    1. John M. Quigley, 2006. "Federal credit and insurance programs: housing," Review, Federal Reserve Bank of St. Louis, vol. 88(Jul), pages 281-310.
    2. Peter Debbaut & Andra C. Ghent & Marianna Kudlyak, 2013. "Are young borrowers bad borrowers? Evidence from the Credit CARD Act of 2009," Working Paper 13-09, Federal Reserve Bank of Richmond.

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