A BEJEAP Symposium article.

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.

Recommended Citation

Gerardi, Kristopher and Willen, Paul (2009) "Subprime Mortgages, Foreclosures, and Urban Neighborhoods," The B.E. Journal of Economic Analysis & Policy: Vol. 9 : Iss. 3 (Symposium), Article 12.
DOI: 10.2202/1935-1682.2232
Available at: http://www.bepress.com/bejeap/vol9/iss3/art12

Readers' Reactions

Mark J. Garmaise, Comments on "Subprime Mortgages, Foreclosures, and Urban Neighborhoods" (March 2009)

Walter N. Torous, Comments on "Subprime Mortgages, Foreclosures, and Urban Neighborhoods" (March 2009)

Alexei Tchistyi, Comments on "Subprime Mortgages, Foreclosures, and Urban Neighborhoods" (March 2009)