Credit impairment and housing tenure status

Calem, Paul S.; Firestone, Simon M.; Wächter, Susan M.

doi:10.1016/j.jhe.2010.07.003

Cited by 22 publications

(21 citation statements)

References 24 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…We first report the results, in Table 3, from the two-equation model (1) The same set of variables is used in the house price and the unconstrained household selection equations, as in Calem et al (2010). Some demographic variables that were used are not reported in Table 3 for the sake of brevity, as they were not statistically significant in either equation.…”

Section: Resultsmentioning

confidence: 99%

“…We follow Calem et al (2010) in constructing the specification for the jointly estimated selection model and unconstrained housing demand model, equations (1). The same variables are used in both equations since we did not find predictors of unconstrained homeowners not related to the house value.…”

Section: Methodsmentioning

confidence: 99%

“…Barakova et al (2003) confirms the importance of credit quality and evaluates the relative impact of credit quality on homeownership rates, distinguishing it from wealth and income constraints. The current study extends Calem et al (2010), which uses information on wealth, income, and credit in the 2004 wave of the National Longitudinal Survey of Youth (NLSY) to demonstrate the effect of wealth, income and credit constraints in accessing homeownership status. This paper also relates to the recent and expanding literature that considers the relationship of collateral values to house price dynamics.…”

Section: Literature Reviewmentioning

confidence: 95%

“…On the other hand, Brueckner et al (2012) find 6 The study arrived at similar findings with and without endogenizing wealth. Similarly, Calem, Firestone, and Wachter (2010) consider potential endogeneity of wealth and income in a study of the impact of financing constraints using NLSY data, and determine the findings to be robust to using instruments.…”

Section: Literature Reviewmentioning

confidence: 99%

See 3 more Smart Citations

Borrowing constraints during the housing bubble

Barakova

Calem

Wächter

2014

Journal of Housing Economics

Self Cite

View full text Add to dashboard Cite

The impact of borrowing constraints on homeownership has been well established in the literature. Wealth is most likely to restrict homeownership followed by credit and income. Using recent movers from the 1979 National Longitudinal Survey of Youth and borrowing constraint definitions commonly used in the literature, we examine the impact of these constraints on the probability of homeownership during the housing market boom between 2003 and 2007. We show that whereas the pool of financially constrained households expanded, the marginal impact of borrowing constraints associated with income and credit quality declined during this period. The constraint associated with wealth, however, continued to have a negative impact on homeownership status, all else equal. The fact that lending standards became less strict is accepted; however the impact of this on homeownership has not been previously studied. Here we find that less restrictive underwriting does appear to have reduced the impact of income and credit quality on homeownership but the impact of the wealth constraint persists. AbstractThe impact of borrowing constraints on homeownership has been well established in the literature. Wealth is most likely to restrict homeownership followed by credit and income. Using recent movers from the 1979 National Longitudinal Survey of Youth and borrowing constraint definitions commonly used in the literature, we examine the impact of these constraints on the probability of homeownership during the housing market boom between 2003 and 2007. We show that whereas the pool of financially constrained households expanded, the marginal impact of borrowing constraints associated with income and credit quality declined during this period. The constraint associated with wealth, however, continued to have a negative impact on homeownership status, all else equal. The fact that lending standards became less strict is accepted; however the impact of this on homeownership has not been previously studied. Here we find that less restrictive underwriting does appear to have reduced the impact of income and credit quality on homeownership but the impact of the wealth constraint persists.

show abstract

Section: Resultsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 95%

Section: Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations

Borrowing constraints during the housing bubble

Barakova

Calem

Wächter

2014

Journal of Housing Economics

Self Cite

View full text Add to dashboard Cite

show abstract

“…Relatively greater volatility in minority property prices arises from several sources, including relatively greater effects of the business cycle on labor income of minorities and disparities in the availability of mortgage credit and/or federal loan guarantees to low-income and minority borrowers (Grinstein-Weiss, Clinton, & Carrillo, 2015); a significantly higher rate of default arising from the concentration of alternative mortgage products and high LTV loans in minority neighborhoods (Brueckner, Calem, & Nakamura (2016); externalities on local home prices from the high incidence of default in such neighborhoods (Immergluck & Smith (2006); and cycles in the degree of appraisal bias toward properties in minority neighborhoods (Lang & Nakamura, 1993;Calem, Firestone, & Wachter, 2010).…”

mentioning

confidence: 99%

Property Risk, Foreclosure Costs and Rational Lending Discrimination

Nickerson

Scofield²

2017

IFB

View full text Add to dashboard Cite

Observations of significant differences in access to credit, loan terms and the volume of lending between demographically distinct groups of borrowers are often interpreted as evidence of potential ethnic, racial or gender discrimination by lenders. The competitive structure of credit markets and the accuracy of measuring individual credit risk render extant models of lending discrimination based on assumptions of credit market inefficiencies, such as adverse selection, increasingly implausible. In stark contrast to existing models of demographic discrimination, we consider a model of mortgage lending in an economy having complete markets, common knowledge and arbitrage-free pricing. Market equilibria in this classical environment may exhibit discrimination even when borrowers, who are distinguished only by observable demographic traits, share an identical measure of individual credit risk. Relatively costlier loan terms, a higher frequency of loan denials, or a complete rationing of credit to a particular demographic class of borrowers may be a value-maximizing strategy when rational lenders perceive that one or more such traits are directly related to adverse features of the representative property securing the loan to a borrower in this class. Omitted from standard statistical underwriting and regulatory review procedures, these features reduce the value of the collateral available to the lender in the event of future default.International Finance and Banking ISSN 2374-2089 2017 When loans are secured by such properties and both lenders and borrowers act strategically, discrimination on this basis will be a property of all market equilibria and can be consistent with an efficient allocation of credit.

show abstract