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The Geography of Subprime Credit
Improving the financial lives of the people living in neighborhoods with large concentrations of lowcredit-scored households1 requires an understanding of the socioeconomic and financial challenges of those places. In this study, we identify such neighborhoods and analyze their socioeconomic and financial attributes, focusing on Illinois, Indiana, Iowa, Michigan, and Wisconsin (the five states served by the Federal Reserve Bank of Chicago). We find geographic patterns in the locations of subprime-scored households, in particular that these households are more highly concentrated in urban ...
Affordability, Financial Innovation, and the Start of the Housing Boom
At their peak in 2005, roughly 60 percent of all purchase mortgage loans originated in the United States contained at least one non-traditional feature. These features, which allowed borrowers easier access to credit through teaser interest rates, interest-only or negative amortization periods, and extended payment terms, have been the subject of much regulatory and popular criticism. In this paper, we construct a novel county-level dataset to analyze the relationship between rising house prices and non-traditional features of mortgage contracts. We apply a break-point methodology and find ...