Minority mortgage market experiences leading up to and during the financial crisis
Stephen L. Ross 22 August 2014
The foreclosure crisis that followed the subprime crisis has had significant negative consequences for minority homeowners. This column reviews recent evidence in the racial and ethnic differences in high cost loans and in loan performance. Minority homeowners, especially black homebuyers, faced higher price of mortgage credit and had worse credit market outcomes during the crisis. This is largely due to the fact that minority borrowers are especially vulnerable to the economic downturn.
The foreclosure crisis and the growth of subprime lending that preceded the crisis have disproportionately affected low income and minority neighbourhoods (Geradi and Willen 2009, Fisher et al. 2010, Mayer and Pence 2007, Edminston 2009) and have had significant negative consequences for minority homeownership (Geradi and Willen 2009).
Global crisis Poverty and income inequality
subprime crisis, mortgage crisis, creditor discrimination, minority lending
Lender regulation and the mortgage crisis
Jihad Dagher, Ning Fu 26 June 2012
Ever since the recent mortgage crisis, calls for tighter regulation on lenders have been widespread. But would stricter supervision and regulation of lenders have been any use during the frenzied optimism of a boom? This column argues that it might. It shows that lending by the loosely regulated non-bank companies was associated with higher foreclosure during the housing downturn when compared with lending by the more tightly regulated banks.
The far-reaching consequences of the US mortgage crisis have sent economists and policymakers searching for a better understanding of the roots of the housing bubble. Recent research shows substantial evidence that the unprecedented mortgage boom was fueled by a deterioration in lending standards, which was at least partly due to a moral hazard problem created by the process of securitising loans or, in other words, the “Originate to Distribute” (OTD) model (see, for example, Dell'Ariccia et al. 2008; Keys et al. 2010; Mian and Sufi 2009; and Purnanandam 2010).
Global crisis International finance
financial regulation, banking regulation, mortgage crisis