Table 1 - uploaded by Dan Immergluck
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At various points in its history, the Federal Housing Administration (FHA) has had particularly large impacts on mortgage and housing markets in the United States. During the early to middle 2000s, FHA lending dwindled to historically low shares of the mortgage market as subprime lending boomed, with some questioning the need for the agency's conti...
Contexts in source publication
Context 1
... the final working data set includes 179,161 mortgage originations, 51 percent of which were GSE loans and 49 percent of which were FHA loans. Table 1 ...
Context 2
... suggested by Table 1, a factor that is expected to play a major role in determining the share of home purchase loans in a region that are FHA-insured is the proportion of homebuyers who put down smaller versus larger downpayments when buying a home. For the 50 MSAs with the largest number of mortgageable properties as of 2007, Figure 2 plots the FHA share of home purchase loans with loans amounts below the FHA loan limit against the share of loans with LTVs above 90 percent. ...
Context 3
... The left hand side of Table 3 is consistent with the results presented in Table 1, namely that the LTV ratio, by itself, is very strongly associated with the FHA-versus-GSE status of a home purchase loan origination and, more specifically, that the vast majority of loans with very high LTVs (that is, above 95 percent) are FHA loans. Knowing the LTV of a loan increases the predictive accuracy from the base level of 51.5 percent (i.e., assuming all loans are GSE loans) to 87.6 percent. ...
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Citations
... The FHA played a major role in the wake of the subprime crisis (Immergluck, 2011), and it continues to be a major provider of low-downpayment financing for borrowers of color. • Eliminate loan-level price adjustments (LLPAs) imposed by the GSEs. ...
... On one hand, this may be due to different levels of explanatory factors in minority areas (e.g., higher house price volatility, lower borrower credit scores, or less credit availability) that are predictive of particular borrowing channels. For example, in early 2008, supply-side constraints to limit borrowing in " declining " or " distressed " markets may have disproportionately restricted access to forward mortgage options for equity extraction in minority neighborhoods, likely increasing the appeal of reverse mortgages in such areas (Avery et al. 2010; Immergluck 2011). 9 Controlling for factors (such as supply-side credit availability) should thus explain some of the observed differences in product selection for borrowers in high-minority areas. ...
Households can borrow against equity through different channels, including home equity lines of credit (HELOCs), second liens, cash-out refinancing, and—for senior homeowners—reverse mortgages. We use data from the New York Federal Reserve/Equifax Consumer Credit Panel, the U.S. Department of Housing and Urban Development, and other sources to jointly estimate the decision to extract equity through these different channels. Specifically, we identify the influence of credit constraints, house price dynamics, and their interactions on the proportion of seniors in a ZIP code extracting through a given channel each year from 2004 to 2012: the boom and bust period in the U.S. housing market. Prior research finds credit constrained households were more responsive to house price gains than non-constrained households. Our results suggest that this response varies depending on the borrowing channel. As house prices increased, cash-out refinancing increased in credit-constrained areas, but HELOCs increased in less-credit-constrained areas. Further, when house prices fell, reverse mortgage originations increased—particularly in credit-constrained areas. We also observe differential responses to credit constraints and house price changes in minority versus non-minority neighborhoods.
... Risks affect the federal government not only through programmes administered directly by FHA, VA, FSA, and RHS risk exposure; but also through its obligation of conservatorship and role of financial guarantor of government sponsored enterprises (GSEs). The federal government endures increased risk exposure from GSEs Freddie Mac and Fannie Mae (Immergluck, 2011). ...
This paper illustrates the potential federal financial risk created by groundwater overabstraction, rapid urbanization, competing economic interests, and institutional arrangements in groundwater-dependent areas of Texas. In the Upper Trinity Groundwater Conservation District, located in the Dallas–Fort Worth metropolitan area, urban sprawl creates suburbanized rural areas reliant upon the Upper Trinity Aquifer. In the past 10 years, competition of economic interests for groundwater has intensified, as the area has experienced rapid urban sprawl combined with escalating Barnett Shale hydraulic fracturing activity, which coincided with two extreme droughts in 2006 and 2011. Urban sprawl generates business opportunities and tax revenues for state and local governments in the short term, but if groundwater overabstraction leads to land subsidence, financial risk is transferred to the federal government through increased risk exposure from federal housing loans and government-backed residential lending.
In the wake of the foreclosure crisis, investors purchased large numbers of single-family residential properties and converted them to rentals. Activists and scholars have documented investor practices of withholding maintenance while raising rents to maximize profits. Increased demand for rental housing since the crisis has constrained the options of low- and moderate-income households, tilting power toward investor-landlords and raising the odds of abuse. A similar although less-discussed dynamic plays out in motels, which are often the last stop before homelessness. Leveraging 10 years of property ownership and eviction records, this article first examines differences among institutional investors and other landlords of single-family rentals in the scale of their holdings and the likelihood of their properties having an eviction record in Las Vegas, Nevada. Second, this article examines the scale of residential motel properties and their association with evictions. Through statistical analysis, we find institutional investors in single-family rentals are associated with higher rates of evictions, although these odds are highest for local actors expanding existing portfolios of low-rental properties. Large residential motel operators are similarly associated with extremely high eviction rates. We offer a number of recommendations for policy and research.
A dramatic decline in the maximum loan amount eligible for Federal Housing Administration (FHA) mortgage insurance in the Salt Lake City, Utah, metropolitan statistical area between 2013 and 2014 provides a natural experiment in the impact of borrowing constraints on housing decisions. Using a difference-in-differences design within a seemingly unrelated regression model, we estimate the impact of this constraint on the size and location of homes purchased by FHA borrowers. We find that borrowers likely constrained by the new loan limits purchased smaller homes with larger downpayments than similar borrowers prior to the loan limit decline. Likely constrained borrowers do not appear to compromise on location, including the quality of local schools. The net effect of the housing choices compelled by the reduction in loan limits does not appear to change the credit risk of borrowers.
The financial health of the mortgage insurance industry is vital for the flow of mortgage credit to low-wealth borrowers. Private mortgage insurance competes with insurance offered through the federal government, particularly the Federal Housing Administration. This article employs a Heckman selection model and a database of mortgage insurance applications to examine the impact of capital reserves and federal competition on the credit decisions of private mortgage insurance companies while accounting for applicants’ decisions to seek private insurance. I find private insurers became more likely to deny applications as their capital ratios fell during the Great Recession. However, loans eligible for insurance through the Federal Housing Administration were less likely to be denied than higher loan amounts were. These findings are important for understanding how the conventional mortgage market, including government-sponsored enterprises, functions through a severe housing crisis.
In recent years, some have questioned the financial wisdom of homeownership and, especially, Black homeownership. This skepticism, especially regarding Black homeownership, is understandable, in part because the mortgage crisis dealt particularly heavy blows to Black homeowners and neighborhoods. However, as the broader housing market has recovered, Blacks have not benefitted as much as they might have due to their relatively low rates of homebuying following the crisis. One persistent concern around the issue of Black homeownership is the notion that home values have not always appreciated as much in the places where Blacks tend to purchase homes. A second, and related, concern is the extent to which Black homebuyers are able to purchase homes outside of majority Black neighborhoods, including in predominantly white neighborhoods. We address the potentially interrelated issues of the segregation of Black homebuying and the appreciation of homes purchased by Blacks in the wake of the crisis. First, using census-tract-level home value appreciation data, we estimate the 2012 to 2017 appreciation rates of homes purchased by 2012 buyers using mortgages, and break these out by the race and ethnicity of homebuyers in 15 large metropolitan areas. We look at how appreciation patterns vary across the 15 metros. We then examine the ethnoracial composition of census tracts where homebuyers receiving mortgages purchased homes in 2017. We conclude with a set of policy recommendations including enforcing and strengthening consumer protection, fair lending and community reinvestment policies, maintaining and strengthening Federal Housing Administration lending, limiting the degree of risk-based pricing in the mortgage market, providing downpayment assistance, and supporting community development financial institutions.
The mortgage market has given rise to a changing and diverse set of borrowers actively using ARMs. Data from the Panel Study of Income Dynamics (PSID) for 2007 and 2013–2015 are used to study borrowing decisions. One view is that an ARM should be offered and taken by those better able to respond to an upward reset. Yet favorable economic conditions induce a demand for mortgages, including by higher risk borrowers, and for these households transactions occur at higher rates, often as ARMs, especially as of 2007. Panel analysis confirms some response to the spread but also to changing demand for mortgages in the shorter run. During the boom, the use of ARMs as a tool for ‘affordability’ led to actual transaction rates exceeding those for fixed rate mortgages. Analysis confirms substantial payment difficulties. Yet, analysis of mortgage transitions, 2007–13, establishes that the ‘affordability’ component to ARM, though less significant, still was present. ARMs were often taken by minorities and those with less education and with family income under $60,000 per year.
This article explores the barriers to implementing mixed-income development plans that incorporate the social (income) and physical (new urbanism) mixing goals of HOPE VI. I examine a comparative case study of three HOPE VI planning efforts in Chicago, Illinois, that exhibit different results. I draw from 25 in-depth interviews across three primary types of actors involved in the development process: developers, housing officials, and consultants. This research uses the perspectives of these key actors to identify the barriers that constrain the implementation of new urbanist designs. Current research indicates that mixed-income developments vary in their degree of income mixing and how new urbanist strategies are implemented. However, there is little consensus on why this is so. Findings indicate implementation of new urbanism is constrained by limited interagency coordination, restrictive design policies, low community buy-in, and exclusive marketing and occupancy practices. Overall, the research offers lessons learned from which I recommend changes in planning practices to assist actors in the consistent implementation of new urbanism in mixed-income developments.
