Search Results
Working Paper
Agency and incentives: vertical integration in the mortgage foreclosure industry
In many U.S. states, the law firms that represent lenders in foreclosure proceedings must hire auctioneers to carry out the foreclosure auctions. The authors empirically test whether processing times differ for law firms that integrate the mortgage foreclosure auction process compared with law firms that contract with independent auction companies. They find that independent firms are able to initially schedule auctions more quickly, but when postponements occur, they are no faster to adapt. Since firms schedule the initial auction before contracting, independent auction companies have an ...
Discussion Paper
Racial Differences in Mortgage Refinancing, Distress, and Housing Wealth Accumulation during COVID-19
The COVID-19 pandemic exacerbated racial disparities in U.S. mortgage markets. Black, Hispanic, and Asian borrowers were significantly more likely than white borrowers to miss payments due to financial distress, and significantly less likely to refinance to take advantage of the large decline in interest rates spurred by the Federal Reserve’s large-scale mortgage-backed security (MBS) purchase program. The wide-scale forbearance program, introduced by the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act, provided approximately equal payment relief to all distressed borrowers, ...
Report
Workshop on Changing Demographics and Housing Demand
On October 24 and 25, 2024, the Federal Reserve Bank of Philadelphia’s Consumer Finance Institute (CFI) and Fannie Mae’s Economic and Strategic Research Group (ESR) cohosted a hybrid conference on the topic of changing U.S. population demographics and their influence on housing demand and housing finance. The event took place at Fannie Mae headquarters in Washington, D.C. and opened with an insightful panel discussion on housing and population forecasts and the potential policy implications, followed by presentations of 22 original research papers, many of which are available as links ...
Discussion Paper
When does delinquency result in neglect?: mortgage delinquency and property maintenance
Studies of foreclosure externalities have overwhelmingly focused on the impact of forced sales on the value of nearby properties, typically finding modest evidence of foreclosure spillovers. However, many quality-of-life issues posed by foreclosures may not be reflected in nearby sale prices. This paper uses new data from Boston on constituent complaints and requests for public services made to City government departments, matched with loan-level data, to examine the timing of foreclosure externalities. I find evidence that property conditions suffer most while homes are bank owned, although ...
Report
Residential Mortgage Refinancing During the COVID-19 Pandemic
Historically low interest rates have spurred a refinance wave among American homeowners, particularly those with higher credit scores and greater home equity. However, millions of borrowers may still benefit from refinancing, and industry forecasts suggest interest rates will remain low over the next 12 months.
Working Paper
Can Everyone Tap Into the Housing Piggy Bank? Racial Disparities in Access to Home Equity
An oft-touted benefit of homeownership is the ability to build and access equity, and in recent years the amount of “tappable” home equity held by US homeowners has reached historic levels. But more than one-quarter of recent applications for mortgage equity withdrawal (MEW) loan products were denied. Black and Hispanic homeowners’ applications were denied at even higher rates: 44 percent and 32 percent, respectively. These racial disparities in denials are larger than those associated with purchase and rate/term refinance mortgage applications. Controlling for loan and borrower ...
Report
Recent Data on Mortgage Forbearance: Borrower Uptake and Understanding of Lender Accommodations
This research brief examines data relating to mortgage forbearance using responses to the January 2021 COVID-19 Survey of Consumers conducted by the Federal Reserve Bank of Philadelphia’s Consumer Finance Institute. We study a national sample of 1,172 homeowners with mortgages, who reported the current and past forbearance status of their mortgage and other household credit accounts, discussed their familiarity with and understanding of lender accommodations that might be available to them, and provided their demographic characteristics. Respondents characterize their current employment ...
Discussion Paper
Racial Differences in Mortgage Refinancing, Distress, and Housing Wealth Accumulation during COVID-19
The COVID-19 pandemic was characterized by both high refinancing volumes and high rates of mortgage nonpayment. Refinancing activity differed significantly across racial and ethnic groups, and we show that the benefits from the lower interest rate environment were not shared equally. Compared to white borrowers, Black and Hispanic mortgage borrowers experienced higher rates of nonpayment, which reflected both a greater transition into nonpayment status for Black and Hispanic borrowers and a lower likelihood of resuming payments. However, strong house price appreciation in recent years, ...
Working Paper
How Resilient Is Mortgage Credit Supply? Evidence from the COVID-19 Pandemic
We study the evolution of US mortgage credit supply during the COVID-19 pandemic. Although the mortgage market experienced a historic boom in 2020, we show there was also a large and sustained increase in intermediation markups that limited the pass-through of low rates to borrowers. Markups typically rise during periods of peak demand, but this historical relationship explains only part of the large increase during the pandemic. We present evidence that pandemic-related labor market frictions and operational bottlenecks contributed to unusually inelastic credit supply, and that ...
Working Paper
How Resilient Is Mortgage Credit Supply? Evidence from the COVID-19 Pandemic
We study the evolution of US mortgage credit supply during the COVID-19 pandemic. Although the mortgage market experienced a historic boom in 2020, we show there was also a large and sustained increase in intermediation markups that limited the pass-through of low rates to borrowers. Markups typically rise during periods of peak demand, but this historical relationship explains only part of the large increase during the pandemic. We present evidence that pandemic-related labor market frictions and operational bottlenecks contributed to unusually inelastic credit supply, and that ...