Full Citation
Title: Segregation and the Geography of Creditworthiness: Racial Inequality in a Recovered Mortgage Market
Citation Type: Journal Article
Publication Year: 2018
ISBN:
ISSN: 1051-1482
DOI: 10.1080/10511482.2017.1341944
NSFID:
PMCID:
PMID:
Abstract: The subprime boom and subsequent foreclosure crisis highlighted risk associated with pursuit of the American Dream of homeownership. People of color and those living in segregated areas were particularly harmed by the dramatic rise and fall of the housing market. Almost a decade after the economy’s collapse, questions remain about racial and spatial disparities in access to mortgage credit. I leverage Home Mortgage Disclosure Act data to explore mortgage application outcomes in 2014. Well into the economy’s recovery, minority borrowers remained at a disadvantage in the mortgage approval process. Whereas 71% of White applicants were approved for home loans, approval rates were lower for Asians (68%), Latinos (63%), and Blacks (54%). Black and Latino borrowers were also significantly more likely to receive higher cost loans than Whites, a practice that has accelerated since the foreclosure crisis. Results suggest that segregation exacerbated racial disparities as lenders funneled expensive credit into isolated minority communities. Furthermore, the differences between White and minority outcomes were largest in census tracts where subprime lending was common in 2006 and foreclosures accumulated during the Great Recession. Together, these findings indicate how spatially organized markets have racialized consequences in a highly segregated society.
Url: https://www.tandfonline.com/doi/full/10.1080/10511482.2017.1341944
User Submitted?: No
Authors: Faber, Jacob William
Periodical (Full): Housing Policy Debate
Issue: 2
Volume: 28
Pages: 215-247
Data Collections: IPUMS NHGIS
Topics: Other
Countries: United States