Search Results
Journal Article
Mortgage Data Help Paint Foreclosure Picture
As foreclosure and delinquency rates escalate, community organizations, counseling agencies and policymakers need good-quality data to understand foreclosure patterns and mitigate foreclosure losses to individuals and communities. To that end, the Federal Reserve System has aggregated mortgage performance data, created dynamic maps and made them available to the public
Journal Article
A Look at Detroit's Affordable Housing Market
The foreclosure crisis had a significant impact on Detroit's home ownership rates. The 2000 and 2010 censuses indicate that the homeownership rate in Detroit was 54.9 percent and 51.1 percent, respectively. According to the 2011-2015 American Community Survey 5-Year Estimates, the current rate is below 50 percent. Detroit now has more renters than homeowners. As more residents move from homeownership, increased focus is being placed on the city?s rental housing market and the findings are not entirely favorable.
Working Paper
Do homeowners associations mitigate or aggravate negative spillovers from neighboring homeowner distress?
Experiences reveal that the monitoring costs of the foreclosure crisis may be nontrivial, and smaller governments may have more success at addressing potential negative externalities. One highly localized form of government is a homeowners association (HOA). HOAs could be well-suited for triaging foreclosures, as they may detect delinquencies and looming defaults through direct observation or missed dues. On the other hand, the reliance on dues may leave HOAs particularly vulnerable to members? foreclosure. We examine how property prices respond to homeowner distress and foreclosure within ...
Working Paper
Pretend or Amend? On Evergreening in CRE
Loan modifications can either amplify or mitigate credit losses depending on the strategy lenders employ. Using detailed supervisory data and a model accounting for competing extension motivations (temporary repayment difficulties, foreclosure costs, and loss recognition costs), I assess why banks extend CRE loans. I find that extensions predominantly address temporary payment frictions, both in normal times and following the Spring 2023 bank stress episode. Contrary to banks "extending-and-pretending" during that episode, banks increased income and principal paydown requirements for ...
Working Paper
High-Skilled Services and Development in China
We document that the employment share of high-skill-intensive services is much lower in China than in countries with similar gross domestic product (GDP) per capita. We build a model of structural change with goods and low- and high-skill-intensive services to account for this observation. We find that large distortions limit the size of high-skill-intensive services in China. If they were removed, both high-skill-intensive services and GDP per capita would increase considerably. We document a strong presence of state-owned enterprises in high-skill-intensive services and argue that this ...
Working Paper
Foreclosure Externalities and Vacant Property Registration Ordinances
This paper tests the effectiveness of vacant property registration ordinances (VPROs) in reducing negative externalities from foreclosures. VPROs were widely adopted by local governments across the United States during the foreclosure crisis and facilitated the monitoring and enforcement of existing property maintenance laws. We implement a border discontinuity design combined with a triple-difference specification to overcome policy endogeneity concerns, and we find that the enactment of VPROs in Florida more than halved the negative externality from foreclosure. This finding is robust to a ...
Discussion Paper
If Prices Fall, Mortgage Foreclosures Will Rise
In our previous post, we illustrated the recent extraordinarily strong growth in home prices and explored some of its key spatial patterns. Such price increases remind many of the first decade of the 2000s when home prices reversed, contributing to a broad housing market collapse that led to a wave of foreclosures, a financial crisis, and a prolonged recession. This post explores the risk that such an event could recur if home prices go into reverse now. We find that although the situation looks superficially similar to the brink of the last crisis, there are important differences that are ...
Journal Article
Foreclosure Rate Drops during COVID-19 despite Dip in On-Time Mortgage Payments
While on-time residential mortgage payments dropped drastically during the 2020 COVID-19 pandemic, most delinquent borrowers avoided foreclosure.
Working Paper
Mortgage-default research and the recent foreclosure crisis
This paper reviews recent research on mortgage default, focusing on the relationship of this research to the recent foreclosure crisis. Research on defaults was advanced both theoretically and empirically by the time the crisis began, but economists have moved the frontier further by improving data sources, building dynamic optimizing models of default, and explicitly addressing reverse causality between rising foreclosures and falling house prices. Mortgage defaults were also a key component of early research that pointed to subprime and other privately securitized mortgages as fundamental ...
Working Paper
Crises in the Housing Market: Causes, Consequences, and Policy Lessons
The global financial crisis of the past decade has shaken the research and policy worlds out of their belief that housing markets are mostly benign and immaterial for understanding economic cycles. Instead, a growing consensus recognizes the central role that housing plays in shaping economic activity, particularly during large boom and bust episodes. This article discusses the latest research regarding the causes, consequences, and policy implications of housing crises with a broad focus that includes empirical and structural analysis, insights from the 2000's experience in the United ...