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Working Paper
Household Mortgage Refinancing Decisions Are Neighbor Influenced
Can social influence effects help explain regional heterogeneity in refinancing activity? Neighborhood social influence effects have been shown to affect publicly observable decisions, but their role in private decisions, like refinancing, remains unclear. Using precisely geolocated data and a nearest-neighbor research design, we find that households are 7% more likely to refinance if a neighbor within 50 meters has recently refinanced. Consistent with a word-of-mouth mechanism, social influence effects are weaker when neighbors are farther away and non existent for non-occupants. Our results ...
Working Paper
The Role of Government and Private Institutions in Credit Cycles in the U.S. Mortgage Market
The distribution of combined loan-to-value ratios (CLTVs) for purchase mortgages has been remarkably stable in the U.S. over the last 25 years. But the source of high-CLTV loans changed during the housing boom of the 2000s, with private securitization replacing FHA and VA loans directly guaranteed by the government. This substitution holds within ZIP codes, properties, and borrower types. Furthermore, the two groups exhibit similar delinquency rates. These findings suggest credit expanded predominantly through the increase in asset values rather than a relaxation of CLTV constraints, which ...
Working Paper
“Sort Selling”: Political Polarization and Residential Choice
Partisanship and political polarization are salient features of today’s society. We merge deeds records with voter rolls and show that political polarization is more than just “political cheerleading.” Descriptively, homeowners are more likely to sell their homes and move when their next-door neighbors are affiliated with the opposite political party. We use a novel, new-next door neighbor identification strategy along with rich demographic control variables and time by-geography fixed effects to confirm causality. Consistent with a partisanship mechanism, our results are strongest when ...
Working Paper
Relieving Financial Distress Increases Voter Turnout: Evidence from the Mortgage Market
Borrowers who refinanced mortgages between 2009 and 2012, a period marked by mortgage distress and dislocated housing markets, but also falling interest rates, were more likely to vote in the 2012 general election than similar borrowers who did not refinance. We exploit an eligibility cutoff in the Home Affordable Refinance Program (HARP) to identify a causal relationship. Consistent with the resource model of voting, the effect of refinancing on turnout is strongest among borrowers with lower incomes and larger debt service reductions. Our findings shed new light on an important channel ...