Association for Public Policy Analysis & Management

Over the past several years, independent mortgage companies (IMCs) originated an increasing proportion of subprime loans, a high proportion of which went into foreclosure. In this study, we compare and contrast the characteristics of neighborhoods that have high proportions of loans by Community Reinvestment Act (CRA)-regulated institutions with those that have high proportions made by IMCs. Our geography is the 100 largest metropolitan statistical areas (MSA), differentiating by central cities, mature suburbs, and developing suburbs. Our unit of observation is the Census tract. We utilize 2005 to 2011 Home Mortgage Disclosure Act (HMDA) data and 2005 to 2011 Census and American Community Survey (ACS) data, all publicly accessible. We perform descriptive statistics, t-tests, and regression analyses to find whether neighborhoods dominated by IMCs are different from neighborhoods dominated by CRA lenders, differentiating by central cities, mature suburbs, and developing suburbs.   

References:

Anacker, Katrin B., ed. The New American Suburb: Poverty, Race, and the Economic Crisis (2015). Farnham: Ashgate.

Anacker, Katrin B. and Kristen B. Crossney. “Analyzing CRA Lending during the Tsunami in Subprime Lending and Foreclosure in the Philadelphia MSA.” Housing Studies 28.4 (2013): 529-552.

Ashton, Philip. “CRA’s ‘blind spots’: Community Reinvestment and Concentrated Subprime Lending in Detroit.” Journal of Urban Affairs 32.5 (2010): 579-608.

Immergluck, Dan. Foreclosed: High-Risk Lending, Deregulation, and the Undermining of America’s Mortgage Market. Ithaca, NY: Cornell University Press.

Kneebone, Elizabeth and Alan Berube. Confronting Suburban Poverty in America (2013). Washington, DC: Brookings.