Full Citation

Title: Subprime's long shadow: Understanding subprime lending's role in the St. Louis vacancy crisis

Citation Type: Dissertation/Thesis

Publication Year: 2022

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Abstract: Using loan-level data, this analysis attempts to connect the events of the subprime home loan boom to the current vacancy crisis in St. Louis, Missouri. Borrowers in Black areas in the north of St. Louis City and St. Louis County received subprime home loans at higher frequencies during the subprime boom period of 2003-2007 than those in White areas, with differences in balloon loans especially stark. Specifically, borrowers in Black neighborhoods received subprime loans more frequently than those with equal FICO scores in White neighborhoods. As a result of these differential loan terms, North City and inner ring “First Suburb” areas saw more foreclosure and borrower payment delinquency, which in turn were highly associated with home vacancy, controlling for other risk factors. However, foreclosure was no longer a significant predictor of home vacancy after controlling for demographic factors and FICO score, indicating that the unequal loan terms may have driven much of the increase in home vacancy in the St. Louis area since the Great Recession.

Url: https://sites.duke.edu/djepapers/files/2022/06/Morgenstern-Senior-Thesis-2022-DJE.pdf

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Authors: Morgenstern, Glen David; Becker, Charles

Institution: Duke University

Department: Economics

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Publisher Location: Durham, NC

Pages: 1-47

Data Collections: IPUMS NHGIS

Topics: Housing and Segregation, Race and Ethnicity

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