Subprime Mortgages, Foreclosures, and Urban Neighborhoods
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Kristopher Gerardi
Abstract
This paper analyzes the impact of the subprime crisis on urban neighborhoods in Massachusetts. The topic is explored using a dataset that matches race and income information from HMDA data with property-level transaction data from Massachusetts Registry of Deeds offices. With this data, we show that much of the subprime lending in the state was concentrated in urban neighborhoods, and that minority homeownerships created with subprime mortgages have proven exceptionally unstable in the face of rapid price declines. The evidence, in Massachusetts, suggests that subprime lending did not, as is commonly believed, lead to a substantial increase in homeownership by minorities, but instead generated turnover in properties owned by minority residents. Furthermore, we argue that the particularly dire foreclosure situation in urban neighborhoods actually makes it somewhat easier for policymakers to provide remedies.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Articles in the same Issue
- Symposium
- The Mortgage Meltdown, the Economy, and Public Policy
- The Future of Mortgage Finance in the United States
- The Mortgage Meltdown, Financial Markets, and the Economy
- Policies to Deal with the Implosion in the Mortgage Market
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