Role of the Community Reinvestment Act in Mortgage Supply and the U.S. Housing Boom

2020 ◽  
Vol 33 (11) ◽  
pp. 5288-5332 ◽  
Author(s):  
Vahid Saadi
Keyword(s):  
House Price ◽  
Mortgage Lending ◽  
Community Reinvestment Act ◽  
Census Tracts ◽  
Community Reinvestment ◽  
Housing Boom ◽  
Price Growth ◽  
Boom Period ◽  
The U.S

Abstract This paper studies the role of the Community Reinvestment Act (CRA) in the U.S. housing boom-bust cycle. I find that enhanced CRA enforcement in 1998 increased the growth rate of mortgage lending by CRA-regulated banks to CRA-eligible census tracts. I show that during the boom period house price growth was higher in the eligible census tracts because of the shift in mortgage supply of regulated banks. Consequently, these census tracts experienced a worse housing bust. I find that CRA-induced mortgages were awarded to borrowers with lower FICO scores and were more frequently delinquent.

Is the Community Reinvestment Act Still Relevant to Mortgage Lending?

2019 ◽  
Vol 30 (1) ◽  
pp. 46-60
Author(s):  
Paul Calem ◽  
Lauren Lambie-Hanson ◽  
Susan Wachter
Keyword(s):  
Mortgage Lending ◽  
Community Reinvestment Act ◽  
Community Reinvestment

scholarly journals Bank-Specific Shocks and House Price Growth in the U.S.

2017 ◽  
Author(s):  
Franziska Bremus ◽  
Thomas W. Krause ◽  
Felix Noth
Keyword(s):  
House Price ◽  
Price Growth ◽  
The U.S

scholarly journals The Blessing of Dimensionality in Forecasting Real House Price Growth in the Nine Census Divisions of the U.S.

2010 ◽  
Vol 19 (1) ◽  
pp. 89-109 ◽  
Author(s):  
Sonali Das ◽  
Rangan Gupta ◽  
Alain Kabundi
Keyword(s):  
House Price ◽  
Price Growth ◽  
The U.S

The Role of Housing and Mortgage Markets in the Financial Crisis

2018 ◽  
Vol 10 (1) ◽  
pp. 25-41 ◽  
Author(s):  
Manuel Adelino ◽  
Antoinette Schoar ◽  
Felipe Severino
Keyword(s):  
Financial Crisis ◽  
Middle Class ◽  
House Price ◽  
Mortgage Lending ◽  
Subprime Crisis ◽  
Price Expectations ◽  
The Great Recession ◽  
Widespread Agreement ◽  
House Price Expectations

Ten years after the financial crisis of 2008, there is widespread agreement that the boom in mortgage lending and its subsequent reversal were at the core of the Great Recession. We survey the existing evidence, which suggests that inflated house-price expectations across the economy played a central role in driving both the demand for and the supply of mortgage credit before the crisis. The great misnomer of the 2008 crisis is that it was not a subprime crisis but rather a middle-class crisis. Inflated house-price expectations led households across all income groups, especially the middle class, to increase their demand for housing and mortgage leverage. Similarly, banks lent against increasing collateral values and underestimated the risk of defaults. We highlight how these emerging facts have essential implications for policy.

scholarly journals Riding the Stagecoach to Hell: A Qualitative Analysis of Racial Discrimination in Mortgage Lending

2016 ◽  
Vol 15 (2) ◽  
pp. 118-136 ◽  
Author(s):  
Douglas S. Massey ◽  
Jacob S. Rugh ◽  
Justin P. Steil ◽  
Len Albright
Keyword(s):  
Racial Discrimination ◽  
Direct Evidence ◽  
Mortgage Lending ◽  
Racial Differentials ◽  
The Social ◽  
Individual Discrimination ◽  
Housing Boom ◽  
To Receive ◽  
Fair Lending ◽  
The U.S

Recent studies have used statistical methods to show that minorities were more likely than equally qualified whites to receive high–cost, high–risk loans during the U.S. housing boom, evidence taken to suggest widespread discrimination in the mortgage lending industry. The evidence, however, was indirect, being inferred from racial differentials that persisted after controlling for other factors known to affect the terms of lending. Here we assemble a qualitative database to generate direct evidence of discrimination. Using a sample of 220 statements randomly selected from documents assembled in the course of recent fair lending lawsuits, we code texts for evidence of individual discrimination, structural discrimination, and potential discrimination in mortgage lending practices. We find that 76 percent of the texts indicated the existence of structural discrimination, with only 11 percent suggesting individual discrimination alone. We then present a sample of texts that were coded as discriminatory to reveal the way in which racial discrimination was embedded within the social structure of U.S. mortgage lending, and to reveal the specific microsocial mechanisms by which this discrimination was effected.

scholarly journals Credit Supply and Housing Speculation

2021 ◽  
Author(s):  
Atif Mian ◽  
Amir Sufi
Keyword(s):  
House Price ◽  
Private Label ◽  
Credit Supply ◽  
Mortgage Credit ◽  
Mortgage Securitization ◽  
Large Expansion ◽  
Housing Boom ◽  
Belief Heterogeneity ◽  
Price Growth ◽  
Boom And Bust

Abstract Credit supply expansion boosts housing speculation and amplifies the housing cycle. The surge in private-label mortgage securitization in 2003 fueled a large expansion in mortgage credit supply by lenders financed with noncore deposits. Areas more exposed to these lenders experienced a large relative rise in transaction volume driven by a small group of speculators, and these areas simultaneously witnessed an amplified housing boom and bust. Consistent with the importance of belief heterogeneity, house price growth expectations of marginal buyers rose during the boom, while housing market pessimism among the general population increased.

scholarly journals Comparing Housing Booms and Mortgage Supply in the Major OECD Countries

2014 ◽  
Vol 230 ◽  
pp. R3-R15 ◽  
Author(s):  
Angus Armstrong ◽  
E. Philip Davis
Keyword(s):  
House Prices ◽  
House Price ◽  
Macroprudential Policy ◽  
Marked Rise ◽  
Commercial Property ◽  
The Past ◽  
Housing Boom ◽  
Per Se ◽  
Compare And Contrast ◽  
Boom Period

The house price and lending boom of the 2000s is widely considered to be the main cause of the financial crisis that began in 2007. However, looking to the past, we find a similar boom in the late 1980s which did not lead directly to a global systemic banking crisis – there were widespread banking difficulties in the early 1990s but these were linked mainly to commercial property exposures. This raises the question whether the received wisdom is incorrect, and other factors than the housing boom caused the crisis, while macroprudential policy is overly targeted at the control of house prices and lending per se.Accordingly, in this paper we compare and contrast the cycles in house prices over 1985–94 with 2002–11. There are more similarities than contrasts between the booms. Stylised facts include a similar rise in real house prices where booms took place, and a marked rise in the real mortgage stock along with real incomes. The aftermath periods are also comparable in terms of house price changes. Econometrically, determinants of house prices are similar in size and sign from the 1980s to date.There remain some contrasts. Leverage rose far more in the later episode and did not contract in the aftermath. Mean reversion of house prices is greater in the earlier period. The earlier boom period showed differences with average house price behaviour which was not mirrored in the most recent boom and inflation was higher. Despite the contrasts, on balance we reject the idea that the recent boom was in some way unique and hence the key cause of the crisis. There is a need for further research to capture distinctive structural and conjunctural factors underlying the recent crisis which differ from the earlier boom and some suggestions are made.

scholarly journals Subprime May Not Have Caused the 2000s Housing Crisis: Evidence from Cleveland, Ohio

2020 ◽  
pp. 1-8
Author(s):  
Lara Loewenstein
Keyword(s):  
House Price ◽  
Causal Role ◽  
Housing Crisis ◽  
Ground Zero ◽  
Mortgage Debt ◽  
Foreclosure Crisis ◽  
National Media ◽  
Housing Boom ◽  
Price Growth ◽  
Stark Contrast

During the 2000s housing bust, Cleveland’s Slavic Village was dubbed “ground zero of the foreclosure crisis” by the national media. Despite this, during the preceding housing boom Cleveland had stable house price growth and relatively low mortgage debt growth, a stark contrast to circumstances in areas such as California that had exceptionally high house price and mortgage debt growth. What explains the relatively minor housing boom and perceived sharp downturn in Cleveland? In this Commentary I show that while subprime debt was a prominent source of debt in Cleveland and especially in its Slavic Village neighborhood during the 2000s, it is difficult to peg subprime debt as playing a causal role in the subsequent foreclosure crisis.

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