Panel: Homeownership and Loan Performance for Vulnerable and Low-Income Populations
(Housing, Community Development, and Urban Policy)

Thursday, November 7, 2019: 8:30 AM-10:00 AM
I.M Pei Tower: 2nd Floor, Tower Court B (Sheraton Denver Downtown)

*Names in bold indicate Presenter

Organizer:  Stephanie Casey Pierce, The Ohio State University
Panel Chair:  J. Michael Collins, University of Wisconsin
Discussants:  Carolina Reid, University of California, Berkeley and Jaclene Begley, New York University

The housing crisis of the Great Recession heightened awareness of issues of homeownership access among low-income and vulnerable populations in the United States. While much scholarship has focused on the causes and consequences of the housing crisis, open questions remain regarding whether and how homeownership access has changed for low-income populations in the years since the crisis.


The first two papers investigate the problem of racial differences in homeownership access. The first paper examines how credit attributes explain the transition to homeownership among minority and non-minority households. Using credit attributes to identify drivers of the gap in transition to homeownership among black, Hispanic, and white households, the authors find that geographic location matters more for homeownership transition among Hispanic households while household composition is a more significant driver of the black-white homeownership transition gap. The second paper also examines the transition to homeownership. In this paper, the authors investigate differences in the timing of entry into homeownership during the Great Recession and find systematic differences in the timing of homeownership entry between minority households and white households, such that minority households were more likely to enter the market at the peak of the housing cycle. The authors explore the consequences of differential entry into homeownership on loan performance and housing values.


The second set of papers explore the effectiveness of policy solutions that aim to increase homeownership access and sustainability among vulnerable populations. The first of these papers investigates the federal Hardest-Hit Fund program launched during the Great Recession to prevent mortgage foreclosure among unemployed homeowners. Using CoreLogic loan performance data, the authors identify homeowners who reside in MSAs that encompass more than one state. They find that offering mortgage payment assistance to homeowners who experience an income shock significantly reduces the long-term probability of default and foreclosure—with larger effects than other more traditional loan modification programs. This study offers important insights on insuring economically vulnerable homeowners against income shocks as part of affordable mortgage program design.    


While HHF is a new federal initiative, the Community Reinvestment Act (CRA) is long-standing policy to increase homeownership access in low-income communities. The final paper on this panel investigates the response of banks to CRA incentives between 1990 and 2017. Using a regression discontinuity design to compare residential mortgage originations in tracts that fall just below and above the low- to moderate-income (LMI) cutoff for CRA eligibility, the author finds that expected rates of mortgage originations vary before the housing boom, during the housing crisis, and after the Great Recession. Additional analysis focuses on the role of liquidity constraints in predicting bank participation in CRA-eligible lending.


Drawing upon a variety of data sources and both causal and descriptive research designs, this panel examines patterns of homeownership and residential mortgage loan performance since the Great Recession and the effects of policy interventions. The two discussants have each conducted extensive research on housing among low-income populations. Drawing upon their expertise, the discussants will reflect on findings and comment on their relevance to current policy.

Race, Ethnicity and the Homeownership Experience
William Emmons, Ana Hernández Kent and Lowell R. Ricketts, Federal Reserve Bank of St. Louis

Stabilizing Mortgage Payments during Income Shocks: Analyzing the Effects of the Hardest Hit Fund Program on Long-Term Loan Performance
Stephanie Moulton1, Yung Chun1, Stephanie Casey Pierce1, Holly Holtzen2, Roberto Quercia3 and Sarah Riley3, (1)The Ohio State University, (2)Ohio Housing Finance Agency, (3)University of North Carolina, Chapel Hill

CRA Lending, the Credit Cycle, and Bank Liquidity Constraints
Timothy Lambie-Hanson, Haverford College