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Journal Article
After the refinancing boom: will consumers scale back their spending?
Concerns are rising that the recent surge in home equity withdrawal has left consumers in a weakened financial position that will, over time, prompt a retrenchment in spending. However, a look at household assets and liabilities suggests that consumers have used the withdrawn funds to restructure their balance sheets and reduce their debt service burden. As a result, households may be in a better position to spend in the years ahead.
Journal Article
The varying effects of predatory lending laws on high-cost mortgage applications
Federal, state, and local predatory lending laws are designed to restrict and in some cases prohibit certain types of high-cost mortgage credit in the subprime market. Empirical evidence using the spatial variation in these laws shows that the aggregate flow of high-cost mortgage credit can increase, decrease, or be unchanged after these laws are enacted. Although it may seem counterintuitive to find that a law that prohibits lending could be associated with more lending, it is hypothesized that a law may reduce the cost of sorting honest loans from dishonest loans and lessen borrowers' fears ...
Journal Article
Home equity lending
Journal Article
Recent developments in home equity lending
The equity that has accumulated in homes is one of the largest components of U.S. household wealth. In recent years, many homeowners have borrowed large amounts against that equity, frequently to finance new consumption expenditures or pay down outstanding consumer debt. In view of the growing importance of home equity credit in household finances, the Federal Reserve has for a number of years participated in nationwide surveys of the use of home equity loans. This article presents findings from a 1997 survey and from other sources of information on home equity lending.
Working Paper
Reverse mortgage loans: a quantitative analysis
Reverse mortgage loans (RMLs) allow older homeowners to borrow against housing wealth without moving. In spite of growth in this market, only 2.1% of eligible homeowners had RMLs in 2011. In this paper, we analyze reverse mortgages in a life-cycle model of retirement, calibrated to age-asset profiles. The ex-ante welfare gain from RMLs is sizable at $1,000 per household; ex-post, low-income, low-wealth and poor-health households use them. Bequest motives, nursing-home moving risk, house price risk, and interest and insurance costs all contribute to the low take-up rate. The model predicts ...
Journal Article
Home-equity lending takes center stage
Journal Article
Adoption of final rule regarding home equity disclosures
Journal Article
Home equity lending: evidence from recent surveys