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Long Term Social Impacts and

Financial Costs of Foreclosure


on Families and Communities
of Color:
A Review of the Literature
WH I T E PA P E R
OCTOBE R 2012

1hls research was funded by Lhe Annle L. Casey loundaLlon. 1he auLhors
Lhank Lhem for Lhelr supporL buL acknowledge LhaL Lhe flndlngs and
concluslons presenLed ln Lhls reporL are Lhose of Lhe auLhors alone and do
noL necessarlly reflecL Lhe oplnlons of Lhe loundaLlon.
1he Annle L. Casey loundaLlon ls a prlvaLe charlLable organlzaLlon dedlcaLed Lo
helplng bulld beLLer fuLures for dlsadvanLaged chlldren ln Lhe unlLed SLaLes. lL was
esLabllshed ln 1948 by !lm Casey, one of Lhe founders of uS, and hls slbllngs, who
named Lhe loundaLlon ln honor of Lhelr moLher. 1he prlmary mlsslon of Lhe
loundaLlon ls Lo fosLer publlc pollcles, human-servlce reforms, and communlLy
supporLs LhaL more effecLlvely meeL Lhe needs of Loday's vulnerable chlldren and
famllles. ln pursulL of Lhls goal, Lhe loundaLlon makes granLs LhaL help sLaLes, clLles,
and nelghborhoods fashlon more lnnovaLlve, cosL-effecLlve responses Lo Lhese needs.
lor more lnformaLlon, vlslL Lhe loundaLlon's webslLe aL !!!"#$%&"'()

repared by:
!ames P. Carr, ConsulLanL Lo nC8C and former Chlef 8uslness Cfflcer
[lm[[ameshcarr.com

kaLrln 8. Anacker, h.u., AsslsLanL rofessor, Ceorge Mason unlverslLy, ArllngLon, vA
kanacker[gmu.edu

2012 naLlonal CommunlLy 8elnvesLmenL CoallLlon. All rlghLs reserved.

!!!"+%(%"'()

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!"!#$%&'! )$**+,-

repared for Lhe Annle L. Casey loundaLlon
by !ames P. Carr and kaLrln 8. Anacker

./012%345 )/6789 &5:86;< 80= >70806789 #/<;< /? >/4369/<@43 /0 >857973< 80= #/55@07;73< /? #/9/4A
+ ,3B73C /? ;D3 .7;348;@43

1hls ls Lhe second paper ln a serles of whlLe papers prepared by Lhe naLlonal CommunlLy 8elnvesLmenL
CoallLlon (nC8C) for Lhe Annle L. Casey loundaLlon. 1he flrsL paper, 1be loteclosote ctlsls ooJ lts lmpoct
oo commooltles of colot. keseotcb ooJ 5olotloos
1
, auLhored by !ames P. Carr, kaLrln 8. Anacker, and
Mlchelle Mulcahy, greaLly beneflLLed from lnpuL from represenLaLlves of more Lhan 40 houslng
advocacy, research, and clvll rlghLs organlzaLlons. ln Lhe flrsL paper, Lhe auLhors deLalled Lhe early
damage caused by Lhe foreclosure crlsls, parLlcularly ln communlLles of color. 1he auLhors also revlewed
Lhe effecLlveness of currenL foreclosure mlLlgaLlon efforLs, ouLllned Lhe ma[or proposals Lo revamp Lhe
morLgage flnance sysLem, and offered some perspecLlves on Lhe llkely lmpacL of Lhose
recommendaLlons on communlLles of color. 1hls second paper was presenLed Lo represenLaLlves of
more Lhan 40 organlzaLlons vla a naLlonal Lelephone conference. ln Lhls paper, we revlew Lhe llLeraLure
on Lhe long-Lerm soclal lmpacLs and flnanclal cosLs of foreclosure on famllles and communlLles of color.
8elow, we provlde an lnLroducLlon, dlscuss Lhe lmpacL of Lhe foreclosure crlsls and Lhe CreaL 8ecesslon
on (a) Lhe wealLh of famllles and communlLles of color, (b) Lhe homeownershlp raLe and home values of
famllles and communlLles of color, (c) small buslness flnanclng, and (d) Lhe prospecLs for wealLh bulldlng
(lncludlng homeownershlp) for famllles and communlLles of color, and follow lL wlLh a concluslon.

We show LhaL many non-Plspanlc WhlLes and Aslans dlverslfy Lhelr accumulaLlon of asseLs whlle
8lacks/Afrlcan Amerlcans and Plspanlcs/LaLlnos Lend Lo pursue only a few paLhs, Lyplcally noL by cholce
buL raLher by consLralnL. We polnL ouL LhaL 8lacks/Afrlcan Amerlcans, Plspanlcs/LaLlnos, and selecL
Aslan groups are aL a dlsadvanLaged poslLlon ln Lerms of wealLh and wealLh bulldlng as Lhey are also
more vulnerable Lo economlc shocks due Lo Lhe concenLraLlon of Lhelr wealLh ln homeownershlp.
1herefore, many 8lack/Afrlcan Amerlcans, Plspanlcs/LaLlnos, and selecL Aslan groups have experlenced
a caLasLrophlc loss of wealLh as a resulL of Lhe foreclosure and economlc crlses. We show LhaL durlng Lhe
CreaL 8ecesslon economlc opporLunlLles eroded fasLer for communlLles of color Lhan for WhlLes and
LhaL Lhese opporLunlLles have been comlng back more slowly ln Lhese communlLles. uesplLe Lhe lower
proporLlon of homeowners among 8lacks/Afrlcan Amerlcans, Plspanlcs/LaLlnos, and selecL groups of
Aslans and Lhe hlgher proporLlons of foreclosure and borrowers underwaLer, homeownershlp remalns
an lmporLanL prlorlLy for many Amerlcans. 1he anLlclpaLed reform of Lhe CovernmenL Sponsored
LnLerprlses (CSLs) and morLgage lendlng wlll deLermlne Lhe exLenL Lo whlch people of color wlll have
Lhe opporLunlLy Lo (re)bulld wealLh Lhrough affordable homeownershlp.

1
hLLp://www.ncrc.org/lmages/sLorles/pdf/research/ncrc_foreclosurewhlLepaper_2011.pdf

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Introduct|on
Cver Lhe pasL flve years or so, Lhe unlLed SLaLes has faced several economlc crlses LhaL have and wlll
conLlnue Lo have vasL effecLs on Lhe opporLunlLles, well-belng, and wealLh-bulldlng poLenLlal of currenL
and fuLure generaLlons. 8ased on 8ealLy1rac analyses, beLween !anuary 1, 2007 and uecember 31,
2011, more Lhan 11.2 mllllon properLles recelved a foreclosure noLlce (Anacker, 2012). 1he Cfflce of Lhe
CompLroller of Lhe Currency and Lhe u.S. ueparLmenL of Lhe 1reasury esLlmaLe, based on a porLfollo LhaL
comprlses 60 percenL of all morLgages ouLsLandlng ln Lhe unlLed SLaLes, LhaL as of uecember 31, 2011,
more Lhan 1.36 mllllon borrowers were serlously dellnquenL (l.e., more Lhan 60 days laLe or more Lhan
30 days laLe wlLh Lhelr morLgage paymenLs ln case of bankrupLcy) (Cfflce of Lhe CompLroller of Lhe
Currency and u.S. ueparLmenL of Lhe 1reasury, 2012). 8oclan eL al. (2011) esLlmaLe LhaL some
proporLlon of Lhese serlous dellnquencles wlll LranslaLe lnLo foreclosures, concludlng LhaL Lhe naLlon ls
noL even halfway Lhrough Lhe foreclosure crlsls" (p. 3). uesplLe Lhe facL LhaL Lhe crlsls conLlnues, Lhe
overall number of foreclosures by Lhe flrsL quarLer of Lhls year has decreased whlle Lhe number of
foreclosures ln Lhe 26 [udlclal foreclosure sLaLes, among Lhem lndlana, ConnecLlcuL, MassachuseLLs,
llorlda, SouLh Carollna, and ennsylvanla, has lncreased. Also, flrsL-Llme foreclosure sLarLs (l.e., elLher
defaulL noLlces or scheduled foreclosure aucLlons) lncreased seven percenL from lebruary Lo March
2012 ln nevada, uLah, new !ersey, Maryland, and norLh Carollna (8ealLy1rac, 2012).

1he LoLal equlLy losL by famllles wlLh recenLly foreclosed properLles ls esLlmaLed aL more Lhan $7 Lrllllon
(8askln, 2012). ln addlLlon, an esLlmaLed $302 bllllon ln properLy value has been losL due Lo nearby
foreclosures (CenLer for 8esponslble Lendlng, n.d. based on C8L, CredlL Sulsse, Moody's Lconomlc.com,
M8A). 1he effecLs of Lhe economlc crlsls have been enormous, boLh naLlonally and globally. CurrenL and
fuLure generaLlons wlll be lmpacLed for decades Lo come.

Whlle Lhe foreclosure crlsls has had vasL consequences LhroughouL Lhe unlLed SLaLes, lL has had a
dlsproporLlonaLe lmpacL on persons of color. 8oclan eL al. (2010) esLlmaLed LhaL among recenL
borrowers, nearly elghL percenL of boLh 8lacks/Afrlcan Amerlcans and Plspanlcs/LaLlnos have been
foreclosed upon, compared Lo 4.3 percenL of non-Plspanlc WhlLes, conLrolllng for dlfferences ln lncomes
among Lhe groups. 1hese proporLlons are especlally sLrlklng glven Lhe dlsproporLlonaLely hlgh share of
morLgage orlglnaLlons of non-Plspanlc WhlLes.

As of Lhe fourLh quarLer of 2011, Lhe non-Plspanlc WhlLe, 8lack/Afrlcan Amerlcan, and Plspanlc/LaLlno
homeownershlp raLes are aL 73.7, 43.1 and aL 46.6 percenL, respecLlvely. ln Lhe fourLh quarLer of 2007,
when Lhe recesslon was offlclally declared, Lhe homeownershlp raLes were aL 74.9, 47.7, and 48.3
percenL, respecLlvely. 1hus, Lhe economlc crlses have caused Lhe greaLesL percenLage polnL losses
among 8lacks/Afrlcan Amerlcans and Plspanlcs/LaLlnos (u.S. 8ureau of Lhe Census, 2012). Lakes expecLs
LhaL Lhe homeownershlp raLe for 8lack/Afrlcan Amerlcan and Plspanlc/LaLlno famllles wlll drop even
furLher, Lo a range of 40 Lo 42 percenL ln Lhe fuLure (uSA 8ealLy Croup, 2010). A reLurn Lo Lhls level of
homeownershlp would wlpe ouL over 13 years of galns ln homeownershlp raLes for people of color.

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1he Impact of the Iorec|osure Cr|s|s and the Great kecess|on on the Wea|th of Iam|||es and
Commun|t|es of Co|or
Whlle many non-Plspanlc WhlLes and Aslans dlverslfy Lhelr accumulaLlon of asseLs, 8lacks/Afrlcan
Amerlcans and Plspanlcs/LaLlnos Lend Lo pursue only a few paLhs, Lyplcally noL by cholce buL raLher by
consLralnL (Conley, 1999, Shaplro, 2004).
Chang (2010) uses 2004 Survey of Consumer llnances (SCl) daLa Lo lllusLraLe Lhls dlvergence by race,
eLhnlclLy, gender, and marlLal sLaLus. Per flndlngs lllusLraLe Lhe raclal and eLhnlc gap wlLh regard Lo Lhe
number of rouLes for wealLh bulldlng chosen by Lhe dlfferenL raclal and eLhnlc groups. 1able 1 below
presenLs lnformaLlon on cash accounLs, Lhe Lerm chosen by Chang (2010),
2
by race, eLhnlclLy, gender,
and marlLal sLaLus.

1ab|e 1: kate of Cash Accounts ne|d and Med|an Va|ue of Cash Accounts by kace, Lthn|c|ty, Gender, and Mar|ta|
Status
kace, Lthn|c|ty, Gender, Mar|ta| Status roport|on w|th Cash Accounts Med|an Va|ue of Cash Accounts (|f owned)
Wh|te
3

Marr|ed]cohab|tat|ng 96 $7,000
S|ng|e ma|e 92 $3,000
S|ng|e fema|e 93 $1,603
8|ack]Afr|can Amer|can
Marr|ed]cohab|tat|ng 83 $2,300
S|ng|e ma|e 68 $1,380
S|ng|e fema|e 76 $1,000
As|an
Marr|ed]cohab|tat|ng 97 $7,300
S|ng|e ma|e 96 $3,000
S|ng|e fema|e 86 $363
n|span|c]Lat|no
Marr|ed]cohab|tat|ng 77 $1,900
S|ng|e ma|e 79 $1,700
S|ng|e fema|e 68 $400
5ootce. cbooq (2010) p. 80 sllqbtly moJlfleJ by ootbots

1able 1 shows LhaL marrled/cohablLaLlng and slngle male Aslans and marrled/cohablLaLlng WhlLes are
Lhe hlghesL proporLlon (l.e., 97 and 96 percenL, respecLlvely) of people holdlng cash accounLs as well as
Lhose wlLh Lhe hlghesL medlan cash accounL balances of $7,300, $3,000, and $7,000, respecLlvely. 1he
Lable above also shows LhaL slngle female 8lacks/Afrlcan Amerlcans and Plspanlc/LaLlnos are Lhe lowesL
proporLlon of people holdlng cash accounLs (l.e., 68 percenL), as well as Lhose wlLh Lhe lowesL medlan
balances of $1,000 and $400, respecLlvely. Pavlng access Lo a cash accounL ofLenLlmes prevenLs Lhe
need Lo use Lyplcally expenslve alLernaLlve banklng servlces, especlally ln Llmes of emergency.




2
Accordlng Lo Chang (2010), cash accounLs lnclude money held ln savlngs accounLs, checklng accounLs (lncludlng money markeL
accounLs), and cerLlflcaLes of deposlL (Cus).
3
Chang (2010) uses Lhe label WhlLe." 1he auLhors of Lhls paper do noL know wheLher Lhls label lncludes Plspanlcs or noL.

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1able 2 below provldes lnformaLlon on sLock ownershlp
4
by race, eLhnlclLy, gender, and marlLal sLaLus.

1ab|e 2: kate of Stock Cwnersh|p and Med|an Lqu|ty by kace, Lthn|c|ty, Gender, and Mar|ta| Status
kace, Lthn|c|ty, Gender, Mar|ta|
Status
roport|on Stock Cwners Med|an Va|ue of Stock Accounts (|f owned)
Wh|te
S

Marr|ed]cohab|tat|ng 67 $26,020
S|ng|e ma|e 31 $18,230
S|ng|e fema|e 43 $12,800
8|ack]Afr|can Amer|can
Marr|ed]cohab|tat|ng 36 $9,400
S|ng|e ma|e 23 $6,000
S|ng|e fema|e 23 $3,240
As|an
Marr|ed]cohab|tat|ng 33 $47,600
S|ng|e ma|e 21 n/A
S|ng|e fema|e 28 n/A
n|span|c]Lat|no
Marr|ed]cohab|tat|ng 23 $3,100
S|ng|e ma|e 21 n/A
S|ng|e fema|e 10 n/A
5ootce. cbooq (2010) p. 85 sllqbtly moJlfleJ by ootbots

1able 2 above shows LhaL marrled/cohablLaLlng WhlLes and Aslans and slngle WhlLe males have Lhe
hlghesL proporLlons of sLock accounLs, wlLh 67, 33, and 31 percenL, respecLlvely. 1hls Lable also shows
LhaL slngle Plspanlc/LaLlno and slngle 8lack/Afrlcan Amerlcan females have Lhe lowesL proporLlon of
sLock accounLs, wlLh 10 and 28 percenL, respecLlvely. Marrled/cohablLaLlng Aslans have Lhe hlghesL
medlan values of sLock accounLs ($47,600), followed by marrled/cohablLaLlng WhlLes ($26,020) and
slngle male WhlLes ($18,230). Whlle sLocks are volaLlle and prone Lo rlsk ln Lhe shorL run, Lhey are
neverLheless consldered as a wealLh bulldlng Lool ln Lhe long run (1haler and SunsLeln, 2008).
1able 3 below shows lnformaLlon on lnvesLmenL real esLaLe wealLh
6
by race, eLhnlclLy, gender, and
marlLal sLaLus.

1ab|e 3: kate of Investment kea| Lstate Cwnersh|p and Med|an Va|ue by kace, Lthn|c|ty, Gender, and Mar|ta|
Status
kace, Lthn|c|ty, Gender, Mar|ta|
Status
roport|on of Investment kea|
Lstate Cwners
Med|an Va|ue of Investment kea|
Lstate (|f owned)
Wh|te
7

Marr|ed]cohab|tat|ng 22 $110,000
S|ng|e ma|e 14 $130,000
S|ng|e fema|e 12 $36,000
8|ack]Afr|can Amer|can
Marr|ed]cohab|tat|ng 17 $40,000

4
Accordlng Lo Chang (2010), sLock ownershlp lncludes dlrecL ownershlp of sLock shares and lndlrecL ownershlp Lhrough muLual
funds and reLlremenL accounLs (such as 401(k) and l8A accounLs).
3
Chang (2010) uses Lhe label WhlLe." 1he auLhors of Lhls paper do noL know wheLher Lhls label lncludes Plspanlcs or noL.

6
Accordlng Lo Chang (2010), lnvesLmenL real esLaLe lncludes any real esLaLe oLher Lhan one's prlmary resldence. 1he medlan
value ls pro-raLed based on Lhe percenLage owned by Lhe respondenL lf ownershlp ls shared.
7
Chang (2010) uses Lhe label WhlLe." 1he auLhors of Lhls paper do noL know wheLher Lhls label lncludes Plspanlcs or noL.

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kace, Lthn|c|ty, Gender, Mar|ta|
Status
roport|on of Investment kea|
Lstate Cwners
Med|an Va|ue of Investment kea|
Lstate (|f owned)
S|ng|e ma|e 9 n/A
S|ng|e fema|e 9 n/A
As|an
Marr|ed]cohab|tat|ng 24 $130,000
S|ng|e ma|e 16 n/A
S|ng|e fema|e 8 n/A
n|span|c]Lat|no
Marr|ed]cohab|tat|ng 16 $60,000
S|ng|e ma|e 13 n/A
S|ng|e fema|e 0 n/A
5ootce. cbooq (2010) p. 87, sllqbtly moJlfleJ by ootbots

1able 3 above shows LhaL marrled/cohablLaLlng Aslans (24 percenL) and WhlLes (22 percenL) have Lhe
hlghesL proporLlon of lnvesLmenL real esLaLe owned and LhaL slngle Plspanlc/LaLlno, Aslan, and
8lack/Afrlcan Amerlcan females have Lhe lowesL proporLlon, wlLh zero, elghL, and nlne percenL,
respecLlvely. Whlle marrled/cohablLaLlng Aslans and slngle WhlLe males have Lhe hlghesL medlan values,
wlLh $130,000 and $130,000, respecLlvely, 8lacks/Afrlcan Amerlcans and Plspanlcs/LaLlnos have Lhe
lowesL medlan values, wlLh $40,000 and $60,000, respecLlvely.
8


1able 4 below shows lnformaLlon on prlvaLely owned buslness asseLs by race, eLhnlclLy, gender, and
marlLal sLaLus.

1ab|e 4: kate of r|vate|y Cwned 8us|ness Assets and Med|an Va|ue by kace, Lthn|c|ty, Gender, and Mar|ta|
Status
kace, Lthn|c|ty, Gender, Mar|ta|
Status
roport|on of r|vate|y Cwned
8us|ness Assets
Med|an Va|ue of r|vate|y Cwned
8us|ness Assets (|f owned)
Wh|te
9

Marr|ed]cohab|tat|ng 19 $130,000
S|ng|e ma|e 12 $100,000
S|ng|e fema|e 6 $60,000
8|ack]Afr|can Amer|can
Marr|ed]cohab|tat|ng 7 $30,000
S|ng|e ma|e 9 n/A
S|ng|e fema|e 3 n/A
As|an
Marr|ed]cohab|tat|ng 18 $100,000
S|ng|e ma|e 13 n/A
S|ng|e fema|e 3 n/A
n|span|c]Lat|no
Marr|ed]cohab|tat|ng 6 $62,000
S|ng|e ma|e 2 n/A
S|ng|e fema|e 0 n/A
5ootce. cbooq (2010), p. 89, moJlfleJ by ootbots

1able 4 above shows LhaL marrled/cohablLaLlng WhlLes (19 percenL) and Aslans (18 percenL) are Lhe
hlghesL proporLlon of prlvaLely owned buslness asseL owners and slngle female Plspanlcs/LaLlnos,

8
uue Lo Lhe slze of Lhe sample some subgroups do noL have enLrles ln Lhe Lable.
9
Chang (2010) uses Lhe label WhlLe." 1he auLhors of Lhls paper do noL know wheLher Lhls label lncludes Plspanlcs or noL.

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8lacks/Afrlcan Amerlcans, and Aslans are Lhe lowesL proporLlon, wlLh zero percenL for Lhe former group
and Lhree percenL for Lhe Lwo laLLer groups. Whlle WhlLes and Aslans have Lhe hlghesL value of prlvaLely
owned buslness asseLs, wlLh $130,000 and $100,000, respecLlvely, 8lacks/Afrlcan Amerlcans and
Plspanlcs/LaLlnos have Lhe lowesL value, wlLh $30,000 and $62,000, respecLlvely.
10


Among Aslan Amerlcans and aclflc lslanders, however, Lhere are vasL dlfferences ln Lerms of lncomes
and wealLh. 1able 3 lllusLraLes Lhese dlfferences, calculaLed by aLraporn eL al. (2009), based on
Amerlcan CommunlLy Survey (2006) daLa
11
.

1ab|e S: ar|ty Indexes of Se|ect Lconom|c Ind|cators for Se|ect As|an Groups
Mean Income Mean Interest,
D|v|dend, and
kenta| Income
Mean nome Va|ue Mean nome Lqu|ty
A|| As|ans $81,300 $2,000 $283,300 $104,400
As|an Ind|an 1.22 1.10 0.93 0.76
Ch|nese 1.01 1.33 1.14 1.29
I|||p|no 1.04 0.30 1.09 0.99
Iapanese 0.99 1.63 1.18 1.84
korean 0.86 1.00 0.88 0.68
V|etnamese 0.82 0.43 0.90 1.06
Cther Southeast
As|an
0.68 0.13 0.33 0.40
Cther As|an 0.87 0.63 0.78 0.67
5ootce. lottopoto et ol. (2009)

aLraporn eL al. (2009) calculaLed parlLy lndexes, Laklng Lhe mean value of each economlc lndlcaLor for
each Aslan group and dlvlded LhaL by Lhe average for all Aslans, concludlng LhaL Lhere are vasL
dlfferences among groups. luLure research should analyze wheLher Lhe parlLy lndexes changed durlng
and afLer Lhe CreaL 8ecesslon.

1he Lables above lllusLraLe LhaL 8lacks/Afrlcan Amerlcans, Plspanlcs/LaLlnos, and selecL Aslan groups are
aL a dlsadvanLaged poslLlon ln Lerms of wealLh and wealLh bulldlng. 1hey are also more vulnerable Lo
economlc shocks due Lo Lhe concenLraLlon of Lhelr wealLh ln one ma[or asseL class. AlLhough owner-
occupled houslng ls Lhe prlnclpal asseL of Lhe medlan household ln Lhe unlLed SLaLes, Lhe overrellance
on owner-occupled houslng for mosL 8lacks/Afrlcan Amerlcans, Plspanlcs/LaLlnos, and selecL Aslan
groups has resulLed ln a caLasLrophlc loss of wealLh as a resulL of Lhe bursL of Lhe naLlonal house prlce
bubble ln 2006 and Lhe ensulng foreclosure crlsls LhaL sLarLed ln early 2007, boLh of whlch have had a
dlsproporLlonaLe lmpacL on famllles and communlLles of color (!olnL CenLer for Pouslng SLudles of
Parvard unlverslLy, 2012). Whlle many people rely on professlonal and personal neLworks Lo galn more
lnslghLs for wealLh bulldlng, many 8lacks/Afrlcan Amerlcans rely on personal neLworks LhaL mlghL noL
necessarlly beneflL Lhem (8eld, 2010).


10
uue Lo Lhe slze of Lhe sample some subgroups do noL have enLrles ln Lhe Lable.
11
We Lhank !ane uuong of Lhe naLlonal CoallLlon for Aslan aclflc CommunlLy uevelopmenL (CACu) for referrlng us Lo Lhls
source.

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Cver Lhe pasL few years, Lhe vasL ma[orlLy of Langlble asseLs has decllned, alLhough Lhe llLeraLure on
wealLh losL durlng Lhe CreaL 8ecesslon ls Lhln due Lo Lhe scarclLy of daLa sources. Lxamples of works LhaL
have focused on Lhls aspecL are Wolff eL al. (2010)
2
, kochhar eL al. (2011), and Weller eL al. (2012).

kochhar eL al. (2011) uLlllze daLa from Lhe Survey of lncome and rogram arLlclpaLlon (Sl) of 2003
and 2009 and flnd LhaL non-Plspanlc WhlLes experlenced a negaLlve change of 16 percenL ln medlan neL
worLh, whereas 8lacks/Afrlcan Amerlcans experlenced a negaLlve change of 33 percenL and
Plspanlcs/LaLlnos experlenced an even hlgher 66 percenL. More speclflcally, non-Plspanlc WhlLe
households had a medlan neL worLh of $134,992 ln 2003 and a medlan neL worLh of $113,149 ln 2009.
ln conLrasL, 8lack/Afrlcan Amerlcan households had a medlan neL worLh of $12,124 ln 2003 and $3,677
ln 2009. Plspanlc/LaLlno households had a neL worLh of $18,339 ln 2003 and $6,323 ln 2009.

Weller eL al. (2012) flnd LhaL communlLles of color are subsLanLlally less llkely Lhan Lhelr whlLe fellow
clLlzens Lo en[oy Lhe opporLunlLles LhaL come from havlng a good [ob, ownlng a home, and havlng a
flnanclal safeLy cushlon ln Lhe form of healLh lnsurance, reLlremenL beneflLs, and prlvaLe savlngs. [.]
1hls dlfference exlsLs because economlc opporLunlLles eroded fasLer for communlLles of color Lhan for
whlLes durlng Lhe CreaL 8ecesslon - and Lhose opporLunlLles have been comlng back much more slowly
for communlLles of color Lhan for whlLes durlng Lhe economlc recovery" (Weller eL al., 2012, p. 1). More
speclflcally, Lhe auLhors show LhaL 8lacks/Afrlcan Amerlcans and Plspanlcs/LaLlnos have suffered from
Lhe followlng dlfflculLles:
Plgh and lncreased unemploymenL raLes compared Lo oLher raclal groups,
Lower employmenL raLes Lhan oLher raclal groups,
Lower medlan household lncomes and decreased medlan household lncomes compared Lo
oLher raclal groups,
ulsproporLlonaLe represenLaLlon among mlnlmum wage earners,
Plgher poverLy raLes and lncreased poverLy raLes slnce Lhe beglnnlng of Lhe recesslon compared
Lo oLher raclal groups,
Lower healLh lnsurance coverage raLes Lhan oLher raclal groups,
Lower reLlremenL plan coverage raLes ln Lhe prlvaLe secLor Lhan oLher raclal groups,
lncrease ln Lhe wealLh gap beLween Lhem and non-Plspanlc WhlLes and Aslans, and
SubsLanLlal decrease ln Lhelr homeownershlp raLe, parLly due Lo foreclosure.

1he Impact of the Iorec|osure Cr|s|s and the Great kecess|on on the nomeownersh|p kate and nome
Va|ues of Iam|||es and Commun|t|es of Co|or
noL surprlslngly, Lhe homeownershlp gap beLween non-Plspanlc WhlLe and 8lack/Afrlcan Amerlcan
households, rlch and poor households, and more-educaLed and less-educaLed households has wldened
conslderably compared Lo a decade earller, based on March CurrenL opulaLlon Surveys Laken ln 2001,
2003, 2003, 2007, 2009, and 2011 (8osenbaum, 2012, see also kochhar eL al., 2009). 1able 6 below
lllusLraLes Lrends ln homeownershlp by race and eLhnlclLy.






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1ab|e 6: 1rends |n nomeownersh|p among U.S. nouseho|ds, by kace and Lthn|c|ty, 2001 to 2011
2001 2003 200S 2007 2009 2011
A|| nouseho|ds 67.94 68.47 69.41 68.46 67.48 66.43
Wh|te
12

nouseho|ds
74.33 73.21 76.18 73.22 74.67 74.03
8|ack
nouseho|ds
48.32 48.41 49.61 49.01 46.92 44.39
n|span|c]Lat|no
nouseho|ds
43.61 47.38 49.23 49.31 47.86 46.39
As|an nouseho|ds 33.43 36.84 39.60 39.79 38.68 37.83
Wh|te]8|ack kat|o 1.34 1.33 1.34 1.33 1.39 1.66
Wh|te]n|span|c]Lat|no
kat|o
1.63 1.38 1.33 1.33 1.36 1.39
Wh|te]As|an kat|o 1.40 1.32 1.28 1.26 1.27 1.28
5ootce. koseoboom (2012), sllqbtly moJlfleJ by ootbots

1able 6 above lllusLraLes LhaL Lhe homeownershlp raLe ln 2011 was lower Lhan Lhe raLe ln 2001 for
WhlLe,

8lack/Afrlcan Amerlcan, and Plspanlc/LaLlno households buL hlgher for Plspanlcs/LaLlnos and
Aslans. lL also lllusLraLes LhaL Lhe homeownershlp raLe peaked ln 2003 for WhlLes and 8lacks/Afrlcan
Amerlcans buL only ln 2007 for Plspanlcs/LaLlnos and Aslans, lndlcaLlng Lhe negaLlve lmpacL of Lhe
foreclosure crlsls buL also a lag effecL for Plspanlcs/LaLlnos and Aslans. 1he lag effecL for
Plspanlcs/LaLlnos and Aslans mlghL be due Lo Lhe hlgher average household slze, whlch mlghL lnclude
more household earners, Lhus posslbly delaylng foreclosure. Whlle Plspanlcs/LaLlnos had an average
household slze of 3.32 members ln 2010, Aslans had a slze of 3.02 members, followed by 8lacks/Afrlcan
Amerlcans (2.63 members) and non-Plspanlc WhlLes (2.46 members) (u.S. 8ureau of Lhe Census, 2010).

1he lag effecL for Aslans mlghL also be explalned by Lhelr favorable lncome slLuaLlon os o qtoop, whlch ls
more favorable Lhan oLher raclal and eLhnlc groups and mlghL have lmpacLed Lhem Lo a lesser degree ln
Lhe foreclosure crlsls. Whlle Aslans had a medlan household lncome of $67,022 ln 2010, non-Plspanlc
WhlLes had a medlan household lncome of $32,480, followed by Plspanlcs/LaLlnos ($40,163) and
8lacks/Afrlcan Amerlcans ($33,378).

1able 6 also shows LhaL 8lacks/Afrlcan Amerlcans had Lhe largesL percenLage polnL change ln Lhe
homeownershlp raLe of all raclal and eLhnlc groups. 1hls change was 2.09 percenLage polnLs beLween
2007 and 2009 and 2.33 percenLage polnLs beLween 2009 and 2011, followed by Plspanlcs (1.43
percenLage polnLs from 2007 Lo 2009 and 1.27 percenLage polnLs from 2009 Lo 2011) and Aslans (1.11
percenLage polnLs beLween 2007 and 2009 and 0.83 percenLage polnLs beLween 2009 Lo 2011). ln
conLrasL, Lhe WhlLe homeownershlp raLe changed only 0.33 percenLage polnLs from 2007 Lo 2009 and

12
8osenbaum (2012) uses Lhe label WhlLe." 1he auLhors of Lhls paper do noL know wheLher Lhls label lncludes Plspanlcs or
noL.

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0.64 percenLage polnLs from 2009 Lo 2011. All raLlos were lowesL ln 2007 buL lncreased agaln ln 2009
and 2011, lndlcaLlng rlslng lnequallLles.

1able 7 below lllusLraLes Lhe vasL dlfferences and Lhe Lrend ln homeownershlp raLes among Aslan
groups, based on Lhe 2000 and 2010 Censuses.

1ab|e 7: nomeownersh|p kates among As|an Amer|can and ac|f|c Is|ander Groups
13

1ota| opu|at|on
2000
nomeownersh|p
kate 2000
1ota| opu|at|on
2010
nomeownersh|p
kate 2010
As|an Ind|an a|one 336,883 46.96 928,183 33.94
8ang|adesh| a|one 11,028 27.11 32,236 43.13
8hutanese a|one n/A n/A 3,230 2.79
8urmese a|one n/A n/A 22,397 28.47
Cambod|an a|one 37,367 44.24 38,431 31.62
Ch|nese (except
1a|wanese)
764,434 38.04 1,037,114 61.96
Ch|nese a|one 803,746 38.42 1,133,720 62.23
I|||p|no a|one 307,638 60.18 741,840 62.19
nmong a|one 26,672 40.18 46,493 46.71
Indones|an a|one 13,173 38.08 19,701 31.00
Iapanese a|one 337,226 60.74 331,834 64.33
korean a|one 338,196 40.73 491,726 46.99
Laot|an a|one 38,741 33.49 31,773 39.64
Ma|ays|an a|one 3,343 27.93 3,306 47.70
Mongo||an a|one n/A n/A 4,191 21.03
Nepa|ese a|one n/A n/A 13,141 28.39
Ck|nawan a|one n/A n/A 1,233 77.73
ak|stan| a|one 40,370 41.77 94,183 33.29
S|ngaporean a|one n/A n/A 1,203 49.88
Sr| Lankan a|one 6,937 31.03 13,303 37.22
1a|wanese a|one 39,292 63.86 73,417 66.02
1ha| a|one 34,718 49.10 30,891 33.67
V|etnamese a|one 292,244 34.17 433,498 63.49
5ootce. 2000 ooJ 2010 u.5. ceososes, 5ommoty llle 2, colcoloteJ by ootbots

Whlle homeownershlp raLes for all groups have lncreased from 2000 Lo 2010, Lhe quesLlon remalns
wheLher Lhe house prlce was lnflaLed when a home was boughL and, lf so, how much equlLy has been
losL durlng Lhe naLlonal house prlce crash. luLure research could focus on Lhe facLors LhaL lnfluence
homeownershlp raLes of Lhese groups, ln parLlcular Lhose groups LhaL have seen large changes, Lhe
polnL ln Llme when homes where boughL, and how much equlLy has been losL.

Whlle much work has focused on Lhe decllne ln properLy values (e.g., SLandard & oor's lndlces, 2012),
noL many works have focused on race and eLhnlclLy. Wolff eL al. (2010) uLlllze daLa from Lhe 2007 Survey
of Consumer llnances (SCl) and Lhe 2009 anel SLudy of lncome uynamlcs (Slu), boLh of whlch are
naLlonal ln scope. ln regards Lo Lhe decllne ln average value of home equlLy from 2007 Lo 2009, Lhey flnd
LhaL all households faced a decllne of 39.1 percenL, whlle non-Plspanlc WhlLes faced a decllne of 36.9
percenL, 8lacks/Afrlcan Amerlcans of 48.0 percenL, and Plspanlcs/LaLlnos of 44.6 percenL, lndlcaLlng
raclal and eLhnlc lnequallLles ln Lerms of loss of value.

13
We Lhank !ane uuong of Lhe naLlonal CoallLlon for Aslan aclflc CommunlLy uevelopmenL (CACu) for referrlng us Lo Lhls
source.

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ln addlLlon, whlle slgnlflcanL work has focused on Lhe number and proporLlon of underwaLer borrowers
(looLe eL al., 2008, Melzer, 2010), mosL analyses have noL focused on race and eLhnlclLy. Wolff eL al.
(2010) are an excepLlon. 1hey use daLa from Lhe 2007 Survey of Consumer llnances (SCl) and Lhe 2009
anel SLudy of lncome uynamlcs (Slu), boLh of whlch are naLlonal ln scope. WlLh regard Lo Lhe
pro[ecLed share of homeowners wlLh negaLlve home equlLy ln 2009, Wolff eL al. (2010) flnd LhaL Lhe
overall pro[ecLed proporLlon of homeowners wlLh negaLlve home equlLy ls 16.4 percenL, whlle Lhe
proporLlon of non-Plspanlc WhlLes ls 14.3 percenL, Lhe proporLlon of 8lacks/Afrlcan Amerlcans ls 27.9
percenL, and Lhe proporLlon of Plspanlcs/LaLlnos ls 23.2 percenL. 1hese flndlngs lndlcaLe LhaL borrowers
noL only purchased properLles ln meLropollLan areas and nelghborhoods LhaL dlsproporLlonaLely losL
value due Lo Lhe foreclosure crlsls buL could also lndlcaLe LhaL some home values mlghL have been
lnflaLed upon orlglnaLlon, corroboraLed by Lhe llLeraLure (naLlonal AssoclaLlon of Pome 8ullders, 2012).

Whlle Wolff eL al.'s (2010) focus ls naLlonal, Cowen and 8ulLrago's (2012) focus ls reglonal. 1hey uLlllze
proprleLary daLa on home equlLy, properLy values, and ouLsLandlng morLgage debL on resldenLlal
properLles ln zlp code areas of slx counLles ln Lhe Chlcago area (Cook, uuage, kane, Lake, McPenry, and
Wlll CounLles) ln Lhe fourLh quarLer 2011. 1able 8 below lllusLraLes Lhelr flndlngs.

1ab|e 8: Average nome Lqu|ty, Va|ues, and Cutstand|ng Mortgage Debt |n the Ch|cago S|x County keg|on
(4
th
uarter 2011)
nome Lqu|ty nome Va|ue Cutstand|ng
Mortgage Debt
Loan-to-Va|ue kat|o
10 or Less of Co|or $108,069 $334,292 $226,223 67.7
10 - 19.9 of Co|or $101,132 $313,381 $212,429 67.7
20 - 49.9 of Co|or $60,379 $240,833 $180,433 74.9
S0 - 79.9 of Co|or $20,761 $160,928 $140,167 87.1
80 or More
8|ack]Afr|can
Amer|can
$6,800 $83,967 $79,167 92.1
S0 or more
n|span|c]Lat|no
$33,174 $278,163 $242,989 87.4
Ch|cago S|x County
keg|on
$72,272 $260,847 $188,373 72.3
5ootce. cowoo ooJ 8olttoqo (2012), sllqbtly moJlfleJ by ootbots

1able 8 above shows LhaL home equlLy, home values, and Lhe ouLsLandlng morLgage debL are hlghesL
buL Lhe loan-Lo-value raLlos are lowesL ln Lhose communlLles LhaL have Lhe lowesL proporLlon of people
of color. 1hese flndlngs lllusLraLe noL only Lhe precarlous flnanclal slLuaLlon many people of color are ln
buL also Lhe effecL of Lhe currenL economlc crlsls on Lhese populaLlons.

1he decrease ln properLy values has noL only affecLed famllles, lL has also affecLed ad[acenL properLles
and enLlre nelghborhoods, Lrlggerlng pollcy dlscusslons. numerous works have analyzed Lhe splllover
effecLs, comlng Lo Lhe concluslon LhaL Lhe splllover effecLs of foreclosure are negaLlve, alLhough Lhere ls
varleLy when lL comes Lo resulLs (see Lee, 2008 for a llLeraLure revlew of Lhe effecL of foreclosures on
properLy values). lor example, Moreno (1998) calculaLes LhaL for Mlnneapolls/SL. aul a foreclosure of a
home wlLh an lPA-lnsured morLgage LhaL becomes vacanL and boarded and LhaL Lhe clLy rehablllLaLes

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for resale wlll affecL surroundlng properLles by abouL $10,000 (whlle Lhe average cosL per foreclosed
properLy ls $73,300).

lmmergluck and SmlLh (2006) analyze properLy characLerlsLlcs and sales prlces for slngle-famlly homes ln
Cook CounLy, Lhe cenLral counLy ln whlch Chlcago ls locaLed. 1hey esLlmaLe LhaL each foreclosure wlLhln
an elghLh of a mlle of a slngle-famlly home resulLs ln a decllne of 0.9 percenL ln value, resulLlng ln an
average of $139,000 (slc) per foreclosure. SchueLz eL al. (2008) focus on a longlLudlnal daLa seL from
2000 Lo 2003 ln new ?ork ClLy and flnd LhaL properLles ln close proxlmlLy Lo foreclosures sell aL a
dlscounL LhaL lncreases wlLh Lhe number of ad[acenL foreclosures, alLhough Lhe lncrease ls noL llnear.
SchueLz eL al. (2008) also flnd LhaL Lhere ls a Lhreshold effecL, where proxlmlLy Lo a very small number of
foreclosures does noL seem Lo have a conslsLenL negaLlve lmpacL on properLy values.

Pardlng eL al. (2009) Lake repeaL-sales daLa from 1990 Lhrough 2007 from seven dlfferenL MeLropollLan
SLaLlsLlcal Areas (MSAs) and flnd LhaL Lhe peak conLaglon effecL from Lhe closesL foreclosures was
approxlmaLely one percenL buL LhaL Lhe dlscounL decreases as Lhe dlsLance Lo Lhe foreclosed properLy
lncreases. Lln eL al. (2009) analyze Lhe effecL of foreclosures on properLy values for Lhe Chlcago rlmary
MeLropollLan SLaLlsLlcal Area (MSA), based on a 2006 daLa seL wlLh four models: flrsL, a model LhaL
measures Lhe Llme effecL only, second, a model LhaL measures Lhe dlsLance effecL only, Lhlrd, a model
LhaL lncludes Llme lnLeracLed wlLh dlsLance effecLs, and fourLh, a model LhaL lncludes Llme lnLeracLed
wlLh dlsLance effecLs, correcLed for sample blas. 1he mosL severe effecL ls 8.7 percenL wlLhln a few
blocks (l.e., less Lhan 0.1 kllomeLers from a foreclosed home) wlLhln Lhe flrsL Lwo years, alLhough over
Llme and wlLh lncreased dlsLance Lhe negaLlve effecL of foreclosure decreases. Leonard and Murdoch
(2009) focus on uallas CounLy, uLlllzlng 2006 daLa and correcLlng for spaLlal lags. ConslsLenL wlLh oLher
research, Lhe magnlLude of Lhe negaLlve effecL dlsappears over space. Leonard and Murdoch flnd LhaL
Lhe effecL of an addlLlonal foreclosure wlLhln 230 feeL of a sale ls approxlmaLely $1,666, conLrolllng for
everyLhlng else ln Lhe model. Campbell eL al. (2011) analyze Lhe effecL of splllovers from foreclosures ln
MassachuseLLs, uslng longlLudlnal daLa LhaL ranges from 1987 Lo 2009. 1hey flnd LhaL foreclosure
dlscounLs are abouL 27 percenL on average, acknowledglng vandallsm LhaL Lyplcally affecLs foreclosed
homes. LasLly, Wassmer (2012) analyzes Lhe exLernal effecLs of resldenLlal home foreclosures on homes
ln SacramenLo, Callfornla, and flnds a 31.9 percenL drop ln markeL value for a non-8eal LsLaLe Cwned
(8LC) home sale, LranslaLlng lnLo an average of $48,827 per home. ln sum, foreclosure splllovers are
negaLlve, Lhus [usLlfylng publlc lnLervenLlon.

lollow-up work by Mlkelbank (2008) for Columbus, Chlo, lncludes Lhe lmpacL of foreclosures on boLh
ad[acenL and vacanL and abandoned properLles on properLy values. Pe flnds LhaL Lhe foreclosure lmpacL
per properLy ls $4,738 ($4,267, $4,236) and LhaL Lhe vacancy lmpacL ls $3,309 ($4,710, $4,411) per
properLy ($10,247, $8,977, $8,667 LoLal per properLy) when (a) Lwo separaLe models are run, one for
foreclosure and one for vacanL and abandoned homes, (b) one model ls run, lncludlng a varlable for
foreclosure and a varlable for vacancy, and (c) one model ls run, lncludlng a varlable for foreclosure and
a varlable for vacancy, ln a spaLlal economeLrlc framework.

WhlLaker and llLzpaLrlck (2012) expand Mlkelbank's (2008) analysls and lnclude foreclosed, vacanL, and
Lax-dellnquenL properLles ln Lhelr analysls for Cuyahoga CounLy, Lhe counLy encompasslng Cleveland,
Chlo. 1hey dlfferenLlaLe beLween hlgh-poverLy, medlum-poverLy, and low-poverLy nelghborhoods and

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use dlfferenL dlsLance buffers. WhlLaker and llLzpaLrlck (2012) flnd LhaL for Lhe case of hlgh-poverLy
nelghborhoods, Lhe sale prlce of a home ls 1.3 percenL lower wlLh each addlLlonal dellnquenL home
wlLhln 300 feeL. ln medlum-poverLy nelghborhoods, Lhere are negaLlve lmpacLs of 2.1 percenL due Lo a
vacanL home, 1.9 percenL due Lo a dellnquenL home, and 2.7 percenL lf a nearby home ls boLh vacanL
and dellnquenL. ln case of low-poverLy nelghborhoods, Lhe lmpacL of vacanL homes ls 1.7 percenL and
Lhe lmpacL of foreclosed homes ls 1.8 percenL on Lhe prlce of a home.

1he prolonged and severe naLlonal house prlce crash has also fueled dlscusslons on sLraLeglc defaulL
(see looLe eL al. (2008) and Culgley and van Crder (1993) for earller work). As Culso eL al. (2011) polnL
ouL, Lhe maln problem ln sLudylng sLraLeglc defaulLs ls LhaL Lhls ls de facLo an unobservable evenL.
Whlle we do observe defaulLs, we cannoL observe wheLher a defaulL ls sLraLeglc. SLraLeglc defaulLers
have all Lhe lncenLlve Lo dlsgulse Lhemselves as people who cannoL afford Lo pay and so Lhey wlll be
dlfflculL Lo ldenLlfy ln Lhe daLa" (Culso eL al., 2011, p. 2). neverLheless, 1lrupaLLur eL al. (2010) develop a
deflnlLlon where sLraLeglc defaulLs are defaulLs on morLgage obllgaLlons by borrowers who are a)
underwaLer on Lhelr morLgages and b) have oLher meanlngful non-morLgage obllgaLlons on whlch Lhey
conLlnue performlng" (1lrupaLLur, 2010, p. 2). 1hey flnd LhaL Lhe lncldence of sLraLeglc defaulLs ls hlgher
aL hlgher credlL scores, more recenL vlnLages, among loans wlLh large balances, and among non-
recourse sLaLes, for example Callfornla. Mayer eL al. (2011, see also CrlfflLh and Llzenga, 2012 for a
dlscusslon on sLraLeglc defaulL ln connecLlon wlLh prlnclpal reducLlons of morLgages secured by Lhe
CSLs) analyze sLraLeglc defaulL ln connecLlon wlLh Lhe announcemenL of Lhe CounLrywlde SeLLlemenL ln
CcLober 2008. 1hey polnL ouL LhaL lL ls dlfflculL Lo observe wheLher a borrower defaulLed ln response Lo
Lhe seLLlemenL buL address Lhls problem ln Lhree ways. llrsL, Lhey esLlmaLe Lhe number of oJJltloool
defaulLs among CounLrywlde borrowers unLll lebruary 2009, [usL before Lhe PAM modlflcaLlon
program was announced, relaLlve Lo Lhe number of addlLlonal defaulLs durlng Lhe same perlod among
comparable borrowers who dld noL beneflL from Lhe seLLlemenL. Second, Lhey lnvesLlgaLe Lhe
seLLlemenL's effecLs ln a cross-secLlon of borrowers wlLh greaLer access Lo llquldlLy Lhrough credlL cards
and lower currenL comblned loan-Lo-value (CL1v) raLlos. 1hlrd, Lhey analyze Lhe effecL of Lhe seLLlemenL
ln a subseL of CounLrywlde-servlced loans LhaL were noL ellglble for Lhe seLLlemenL. Mayer eL al. (2011)
flnd LhaL Lhe CounLrywlde SeLLlemenL's effecLs were largesL among CounLrywlde borrowers who had
access Lo subsLanLlal llquldlLy Lhrough credlL cards and Lhose wlLh relaLlvely low currenL CL1v raLlos,
lndlcaLlng sLraLeglc behavlor among borrowers ln response Lo Lhe seLLlemenL.

8huLLa eL al. (2010) dlscuss Lwo hypoLheses abouL why borrowers defaulL. 1he sLraLeglc or ruLhless
defaulL occurs when a borrower's equlLy falls sufflclenLly below some Lhreshold amounL and Lhe
borrower decldes LhaL Lhe cosLs of paylng back Lhe morLgage ouLwelgh Lhe beneflLs of conLlnulng Lo
make paymenLs and holdlng on Lo Lhelr home" (8huLLa eL al., 2010, p. 3). 1he double Lrlgger"
hypoLhesls holds when defaulL occurs when equlLy ls negaLlve buL above Lhe Lhreshold sLaLed ln Lhe
sLraLeglc defaulL" hypoLhesls (dlscussed above) yeL Lhere ls a negaLlve lncome shock.

Whlle some sLudles uLlllze quanLlLaLlve meLhods, oLhers use quallLaLlve ones. ln regards Lo quanLlLaLlve
meLhods, 8huLLa eL al. (2010) sLudy borrowers from Arlzona, Callfornla, llorlda, and nevada who
purchased homes ln 2006, uslng non-prlme morLgages wlLh 100 percenL flnanclng. Cf Lhese
approxlmaLely 133,000 loans, 80 percenL had defaulLed by SepLember 2009. 8ased on a cumulaLlve
dlsLrlbuLlon funcLlon, Lhe auLhors flnd LhaL Lhe medlan borrower walks away from hls home when he ls

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62 percenL underwaLer (8huLLa eL al., 2010, p. 21), meanlng LhaL half of Lhe borrowers would walk
away lf Lhelr home was less Lhan 62 percenL underwaLer and LhaL half would walk away lf Lhelr home
was more Lhan 62 percenL underwaLer. 1hls ls helpful, as much of Lhe llLeraLure has focused on Lhe
number and Lhe proporLlon of borrowers underwaLer (e.g., abouL 12 mllllon borrowers (8ernanke,
2012), or abouL 23 percenL of borrowers (CoreLoglc, 2012)) and Lhe proporLlon serlously dellnquenL (l.e.,
pasL 60 days due) (Cfflce of Lhe CompLroller of Lhe Currency and uS ueparLmenL of Lhe 1reasury, 2012).
neverLheless, lL would be lnLeresLlng Lo know more abouL Lhose borrowers who are more underwaLer
Lhan 62 percenL ln Lerms of geography, demography, and socloeconomlcs. luLure research should focus
on Lhese aspecLs.

ln regards Lo quallLaLlve meLhods, Culso eL al. (2011) uLlllze Lhe Chlcago 8ooLh kellogg School llnanclal
1rusL lndex survey, wlLh a LoLal of 4,139 observaLlons over elghL waves from uecember 2008 Lo
SepLember 2010, Lo flnd ouL Lhe proporLlon of currenL defaulLs LhaL ls sLraLeglc and Lo sLudy Lhe
deLermlnanLs of borrowers' aLLlLudes Lowards sLraLeglc defaulL. 1hree lmporLanL quesLlons were: llrsL,
Pow many people do you know who have defaulLed on Lhelr house morLgage?" Second, Cf Lhe people
you know who have defaulLed on Lhelr morLgage, how many do you Lhlnk walked away even lf Lhey
could afford Lo pay Lhe monLhly morLgage?" 1hlrd, Lhe auLhors of Lhe survey asked, lf Lhe value of your
morLgage exceeded Lhe value of your house by 30k [100k/130k] would you walk away from your house
(LhaL ls, defaulL on your morLgage) even lf you could afford Lo pay your monLhly morLgage?" Culso eL al.
(2011) classlfy a defaulLer as a sLraLeglc one when he/she goes from belng currenL Lo slxLy days laLe on
hls/her morLgage for Lhe flrsL Llme whlle remalnlng currenL on hls/her credlL card balances for Lhe
followlng slx monLhs. Cverall, 82 percenL LhoughL LhaL sLraLeglc defaulL was morally wrong. 1he
percelved sLraLeglc defaulL raLe ls 33 percenL. nlne percenL would walk away once negaLlve equlLy
reaches $30,000, and 23 percenL would walk away once negaLlve equlLy reaches $23,000. More
speclflcally, 1able 9 below shows Lhe proporLlon of borrowers defaulLlng sLraLeglcally by house value.

1ab|e 9: roport|on of 8orrowers Defau|t|ng Strateg|ca||y by nouse Va|ue
nouse Va|ue Shortfa|| at 5S0k Shortfa|| at 5100k Shortfa|| at 51S0k
Less than 5100k 14.4 33.9 32.8
5100k to 5200k 11.3 27.8 44.4
5200k to 5400k 8.6 19.0 31.1
More than 5400k 6.7 16.8 30.8
5ootce. Colso et ol. (2011), sllqbtly moJlfleJ by ootbots

1able 9 above lllusLraLes LhaL Lhe propenslLy Lo sLraLeglcally defaulL ls hlghesL (32.8 percenL) for Lhose
who have a shorLfall of $130,000 when Lhe house value ls less Lhan $100,000 and LhaL Lhls propenslLy ls
lowesL (6.7 percenL) for Lhose who have a shorLfall of $30,000 when Lhe house value ls more Lhan
$400,000. Culso eL al. (2011) also provlde lnformaLlon on Lhe change ln Lhe defaulL probablllLy when Lhe
shorLfall lncreases, lllusLraLed ln 1able 10 below.




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1ab|e 10: Change |n Defau|t robab|||ty When Shortfa|| Increases by nouse Va|ue
nouse Va|ue Change from 0 to 5S0k
[s|c]
Change from 5S0k to
5100k [s|c]
Change from 5100k to
51S0k [s|c]
Less than 5100k 14.4 [slc] 21.3 16.9
5100k to 5200k 11.3 [slc] 16.3 16.6
5200k to 5400k 8.6 [slc] 10.4 12.1
More than 5400k 6.7 [slc] 10.1 14.0
5ootce. Colso et ol. (2011), sllqbtly moJlfleJ by ootbots

1able 10 above lllusLraLes LhaL, perhaps lnLeresLlngly, Lhe hlghesL change ln Lhe defaulL probablllLy
occurs when Lhe shorLfall lncreases from $30,000 Lo $100,000 ln case Lhe house value ls less Lhan
$100,000 (21.3), followed by an lncrease from $100,000 Lo $130,000, also for homes below $100,000,
lndlcaLlng borrowers who do noL have much Lo lose any longer due Lo Lhe severe house prlce crash.
Culso eL al. (2011) also analyze socloeconomlc facLors LhaL lnfluence Lhe declslon Lo defaulL sLraLeglcally
for Lwo scenarlos: (a) a sLraLeglc defaulL for a decrease ln home equlLy of $30,000 and (b) a sLraLeglc
defaulL for a decrease ln home equlLy of $100,000. 1he auLhors conducL a loglsLlc regresslon analysls
wlLh Lhe dependenL varlable LhaL equals 1 lf Lhe borrower says LhaL he/she ls wllllng Lo defaulL when Lhe
value of hls/her home equlLy decreased by $30,000 or $100,000, respecLlvely, eveo lf be/sbe coo offotJ
to poy tbe mootbly mottqoqe costs.

1he auLhors flnd LhaL ln Lhe case of a $30,000 decrease, 8lacks/Afrlcan Amerlcans, Plspanlcs/LaLlnos,
senlor clLlzens, Lhose who have wealLh (measured wlLh a proxy), and Lhose who Lhlnk LhaL Lhere ls a
probablllLy of becomlng unemployed over Lhe nexL 12 monLhs are more llkely Lo defaulL sLraLeglcally,
whlle Lhose resldlng on Lhe WesL coasL, females, and Lhose wlLh an lncome hlgher Lhan $100,000 are
less llkely Lo defaulL sLraLeglcally. ln Lhe case of a $100,000 decrease, 8lacks/Afrlcan Amerlcans,
Plspanlcs/LaLlnos, Lhose under age 33, and Lhose who Lhlnk LhaL Lhere ls a probablllLy of becomlng
unemployed over Lhe nexL 12 monLhs are more llkely Lo defaulL sLraLeglcally, whlle Lhose resldlng on Lhe
WesL coasL, Lhose who hold a college degree, Lhose who have chlldren, and Lhose wlLh an lncome hlgher
Lhan $100,000 are less llkely Lo defaulL sLraLeglcally. 1he auLhors also analyze Lhe effecL of morallLy on
sLraLeglc defaulL, Lhe change ln morallLy, anger, LrusL, and sLraLeglc defaulLs, defaulLs and lnformaLlon
abouL oLher defaulLers, Lhe deLermlnanLs of Lhe probablllLy LhaL lenders pursue defaulLs, and Lhe role of
Lhe medla ln explalnlng sLraLeglc defaulLs ln Lhelr sLudy.

8lley (2012) repllcaLed Lhe Culso eL al. (2011) sLudy, based on a 2011 survey of 600 loans ln Lhe
CommunlLy AdvanLage rogram (CA). CA ls a secondary morLgage markeL program sLarLed ln 1998 by
Lhe lord loundaLlon, lannle Mae, and Self-Pelp, a non-proflL lender ln uurham, norLh Carollna. Self-
Pelp purchases 30-year flxed-raLe loans wlLh near-prlme lnLeresL raLes LhaL were made Lo borrowers
wlLh lncomes less Lhan 80 percenL of Lhe area medlan lncome (AMl) or Lo borrowers of color who llve ln
Census LracLs wlLh a hlgh proporLlon of people of color LhaL are below 113 percenL of Lhe AMl.

1he CommunlLy AdvanLage rogram and anel Survey was conducLed ln 2011 by Lhe CenLer for
CommunlLy CaplLal aL Lhe unlverslLy of norLh Carollna aL Chapel Plll. 1he goal of Lhe survey was Lo

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collecL aLLlLudes abouL sLraLeglc defaulL. 1hlrLy-four percenL of Lhe respondenLs sLaLed LhaL Lhey knew
defaulLers, and 14 percenL answered LhaL Lhey knew sLraLeglc defaulLers, slmllar Lo Culso eL al. (2011).
8lley calculaLed Lhe percelved sLraLeglc defaulL raLe (l.e., Lhe number of sLraLeglc defaulLers Lo LoLal
defaulLers) as 34 percenL, slmllar Lo Culso eL al. (2011)'s 33 percenL. LlghLy-one percenL LhoughL LhaL
defaulL was morally wrong, 12 percenL would walk away ln case of a $20,000 equlLy shorLfall, 27 percenL
would walk away ln case of a $30,000 equlLy shorLfall, and 31 percenL would walk away ln case of a
$100,000 equlLy shorLfall.

1hese proporLlons are much hlgher Lhan Lhe proporLlons obLalned by Culso eL al. (2011). ln Lhelr case,
only nlne percenL would walk away ln case of a shorLfall of $30,000, and only 23 percenL would walk
away ln case of a shorLfall of $100,000. Powever, 8lley (2012) also found LhaL Lhe medlan borrower
would defaulL aL 111 percenL negaLlve equlLy, compared Lo 62 percenL negaLlve equlLy ln 8huLLa eL al.
(2010). 1o mlnlmlze sLraLeglc defaulL rlsk, 8lley (2012) suggesLs LargeLlng any prlnclpal wrlLe-downs or
lnLeresL raLe reducLlons based on negaLlve equlLy debL servlce burden relaLlve Lo lncome.

WhlLe (2010) polnLs ouL LhaL Lhe vasL ma[orlLy of underwaLer borrowers has noL walked away and
argues LhaL Lhe predomlnanL message of pollLlcal, soclal, and economlc lnsLlLuLlons ln Lhe unlLed SLaLes
has funcLloned Lo culLlvaLe fear, shame, and gullL ln Lhose who mlghL conLemplaLe foreclosure. 1hese
emoLlons ln Lurn funcLlon as a form of lnLernallzed soclal conLrol, encouraglng conformlLy Lo Lhe norm of
meeLlng one's morLgage obllgaLlons as long as one can afford Lo do so" (WhlLe, 2010, p. 997-998). Pe
also polnLs ouL LhaL Lhe credlL-reporLlng sysLem operaLes ln con[uncLlon wlLh oLher economlc, pollLlcal,
and soclal lnsLlLuLlons as a means of soclal conLrol by lncreaslng Lhe emoLlonal cosL of defaulL.
Moreover, Lhe credlL-reporLlng sysLem operaLes largely ouLslde of Lhe legal process as a norm enforcer,
ensurlng lmmedlaLe repuLaLlonal punlshmenL for Lhose lndlvlduals who mlghL be LempLed Lo flouL Lhelr
'moral commlLmenL Lo pay' by exerclslng Lhelr legal rlghL Lo defaulL" (WhlLe, 2010, p. 1006-1007).

1he lmpllcaLlons of Lhe economlc crlses have been enormous, boLh naLlonally and globally, and wlll
conLlnue Lo lmpacL currenL and fuLure generaLlons for decades Lo come. AL Lhe same Llme, Lhe decllne ln
house prlces ln mosL communlLles ln Lhe unlLed SLaLes could LranslaLe lnLo homeownershlp
opporLunlLles for Lhose who have malnLalned relaLlvely sLable employmenL, a favorable lncome and
llablllLy slLuaLlon, and a llCC score LhaL makes obLalnlng a susLalnable morLgage posslble. neverLheless,
some argue Lhe recenL decrease ln lendlng (Sclre, 2011) makes homeownershlp a mooL polnL.

Pendey and SLeuerle (2011) analyze movemenL lnLo and ouL of homeownershlp for 1,200 households
wlLh chlldren ln 13 low-lncome nelghborhoods ln slx clLles
14
, based on Lwo surveys, one conducLed ln
2003-06 and one ln 2008-09 or 2010. Whlle Lhe homeownershlp raLe lncreased, 17 percenL of boLh
renLers and owners changed Lenure beLween Lhe Lwo survey daLa polnLs. WlLh regard Lo movemenLs
ouL of homeownershlp, Lhe auLhors found LhaL Lhe poverLy and equlLy sLaLuses maLLer mosL. More
speclflcally, homeowners surveyed ln Lhe flrsL survey who llved below 100 percenL of Lhe federal
poverLy level or beLween 100 and 200 percenL of Lhe poverLy level were, respecLlvely, 320 and 184
percenL more llkely Lo become renLers Lhan households llvlng above 200 percenL of Lhe poverLy level,"
afLer conLrolllng for oLher characLerlsLlcs (Pendey and SLeuerle, 2011, p. 1).

14
uenver, ues Molnes, lndlanapolls, rovldence, San AnLonlo, and WhlLe CenLer, locaLed ln klng CounLy, WashlngLon.

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Also, Lhose wlLh less Lhan 10 percenL equlLy ln Lhelr homes were 3.7 Llmes more llkely Lo have become
renLers Lhan Lhose wlLh 20 Lo 40 percenL equlLy" (Pendey and SLeuerle, 2011, p. 1). WlLh regard Lo
movemenL lnLo homeownershlp, Lhe auLhors found, lnLeresLlngly, LhaL Plspanlcs, regardless of wheLher
Lhey are lmmlgranLs or noL, have more Lhan Lwlce Lhe probablllLy of movlng from renLlng Lo ownlng as
non-Plspanlc [W]hlLes [whlle] non-Plspanlc blacks are 67 percenL less llkely Lo become owners Lhan
[W]hlLes llvlng ln Lhese nelghborhoods" (Pendey and SLeuerle, 2011, p. 1-2). 1hls ls remarkable glven Lhe
Plspanlc/LaLlno homeownershlp raLe of 46.39 percenL ln conLrasL Lo Lhe non-Plspanlc WhlLe raLe of
74.03 percenL ln 2011 (8osenbaum, 2012). 1hls ls also lnLeresLlng glven kochhar eL al.'s (2011) flndlngs
LhaL 8lacks/Afrlcan Amerlcans experlenced a negaLlve change of 33 percenL and Plspanlcs/LaLlnos 66
percenL, based on Lwo Sl surveys (2003 and 2009). More research ln dlfferenL communlLles should be
underLaken on changes ln Lenure, equlLy, and asseLs among people, ln parLlcular people of color.

1he Impact of the Iorec|osure Cr|s|s on ke|ocat|on of Iam|||es and Commun|t|es of Co|or
Whlle lnvolunLary moves are almosL never easy for adulLs, Lhey are Lyplcally very dlfflculL for chlldren,
who need conslsLenL rouLlnes and sLable famlly sLrucLures. Whlle Lhe effecLs of moves on chlldren have
been sLudled exLenslvely ln Lhe pasL (8lrman eL al., 1994, !elleyman and Spencer, 2008, kerbow eL al.,
2003, 8umberger, 2003, 1ucker eL al., 1998), Lhe effecLs of moves due Lo Lhe foreclosure crlsls on
chlldren have only been sLudled recenLly and ln selecL communlLles. AL Lhe naLlonal level, lsaacs (2012)
esLlmaLes LhaL more Lhan elghL mllllon chlldren have been affecLed by Lhe foreclosure crlsls, 2.3 mllllon
chlldren ln slngle-famlly homes have already losL Lhelr homes Lo foreclosures, Lhree mllllon chlldren ln
owner-occupled homes are aL serlous rlsk of loslng Lhelr homes ln Lhe fuLure, and Lhree mllllon chlldren
losL or are aL rlsk Lo lose renLed homes due Lo foreclosure (see also Lovell and lsaacs, 2008, for earller
naLlonal esLlmaLes).

AL Lhe local level, 8een eL al. (2011a) analyze Lhe prevalence of foreclosure among bulldlngs houslng
new ?ork ClLy publlc school sLudenLs, more speclflcally elemenLary and mlddle school sLudenLs who
aLLended publlc school ln Lhe 2003 Lo 2004 (12,067 foreclosed sLudenLs) and 2006 Lo 2007 school years
(20,433 foreclosed sLudenLs). ConslsLenL wlLh Lhe llLeraLure dlscussed elsewhere (Carr eL al., 2011), 36
percenL of sLudenLs llvlng ln properLles enLerlng foreclosure were 8lack/Afrlcan Amerlcan ln 2003 Lo
2004, and 30 percenL were Plspanlc/LaLlno. ln 2006 Lo 2007, 37 percenL of sLudenLs llvlng ln properLles
enLerlng foreclosure were 8lack/Afrlcan Amerlcan, compared Lo 29 percenL Plspanlcs/LaLlnos. 8een eL
al. (2011a) also analyze school moblllLy by foreclosure sLaLus for school years 2006 Lo 2007 and 2007 Lo
2008. 1able 11 lllusLraLes Lhelr flndlngs on school moblllLy by foreclosure sLaLus.

1ab|e 11: Schoo| Mob|||ty by Iorec|osure Status, 2006 to 2007 and 2007 to 2008
Students L|v|ng |n ropert|es
Lnter|ng Iorec|osure
Students Not L|v|ng |n ropert|es
Lnter|ng Iorec|osure
Grades 1 to 4
- sLayed ln same school
- changed schools
- exlLed sysLem

84
13
3


83
10
7

Grades 6 to 7
- sLayed ln same school
- changed schools
- exlLed sysLem

83
12
3


83
10
7

5ootce. 8eeo et ol. (2011), obbtevloteJ by ootbots

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1able 11 above shows LhaL a hlgher proporLlon of sLudenLs llvlng ln properLles enLerlng foreclosure
changed schools Lhan sLudenLs noL llvlng ln properLles enLerlng foreclosure and a hlgher proporLlon of
sLudenLs oot llvlng ln properLles enLerlng foreclosure exlLed Lhe publlc school sysLem, compared Lo
sLudenLs llvlng ln properLles enLerlng foreclosure.

8een eL al. (2011b) also conducL regresslon analyses Lo undersLand Lhese flndlngs beLLer. ConLrolllng for
race, eLhnlclLy, poverLy, grade, and orlglnal school, Lhey flnd LhaL for oll sLudenLs ln Lhe new ?ork ClLy
publlc schools, 8lack/Afrlcan Amerlcan sLudenLs were more llkely Lo move Lhan oLhers (see 1able 4 ln
8een eL al. (2011b)). 1he auLhors also flnd LhaL non-Plspanlc WhlLe fotecloseJ sLudenLs are less llkely Lo
move Lo a new school (alLhough Lhe regresslon coefflclenL ls noL slgnlflcanL aL Lhe flve percenL level),
and LhaL Plspanlc and Aslan foreclosed sLudenLs are more llkely Lo move Lo a new school (Lhe coefflclenL
for Plspanlcs ls slgnlflcanL aL Lhe flve percenL level whlle lL ls noL slgnlflcanL for Aslans, 8lack/Amerlcan
Amerlcan sLudenLs serve as base case ln Lhe regresslon, see 1able 3 ln 8een eL al. (2011b)).

1he lmpacLs of moves Lrlggered by Lhe foreclosure crlsls on academlc achlevemenL of chlldren have
been mlxed (and Lhese resulLs are conslsLenL wlLh earller sLudles before Lhe foreclosure crlsls (see
8umberger, 2003, among oLhers)). 8een eL al. (2011a) flnd for new ?ork clLy LhaL sLudenLs who moved,
regardless of wheLher Lhey moved due Lo a foreclosure or noL, experlenced a decrease ln Lhe proporLlon
of LesLlng proflclenL/advanced ln boLh maLhemaLlcs and readlng, as lllusLraLed ln 1able 12 below.

1ab|e 12: Compar|son of Mean Schoo| Character|st|cs of Students Grades 1 to 7 before and after Move
by Iorec|osure Status
Cr|g|n Schoo|
2006 to 2007
Dest|nat|on
Schoo|
2007 to 2008
Change between
Schoo| ears
Character|st|cs of Schoo|s of Ch||dren |n
8u||d|ngs Lnter|ng Iorec|osure Who
Moved
- 8lack/Afrlcan Amerlcan
- Plspanlc/LaLlno
- lree and 8educed rlce Lunch
- Lngllsh Language Learners
- Speclal LducaLlon
- 1esLlng roflclenL/Advanced ln MaLh
- 1esLlng roflclenL/Advanced ln 8eadlng
number of SLudenLs



30
34
81
13
13
74
33
1,998



46
33
77
11
14
62
48
1,936



-4
1
-4
-3***
0
-12***
-3***

Character|st|cs of Schoo|s of Ch||dren |n
8u||d|ngs !"# Lnter|ng Iorec|osure Who
Moved
- 8lack/Afrlcan Amerlcan
- Plspanlc/LaLlno
- lree and 8educed rlce Lunch
- Lngllsh Language Learners
- Speclal LducaLlon
- 1esLlng roflclenL/Advanced ln MaLh
- 1esLlng roflclenL/Advanced ln 8eadlng
number of SLudenLs



30
41
77
18
14
77
37
89,393



31
41
74
13
14
63
31
89,238



1
-1
-3**
-3***
0
-12***
-3***

5ootce. 8eeo et ol. (2011o), sllqbtly moJlfleJ by ootbots

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!"#$%& less tboo ooe petceot of stoJeots wete excloJeJ ftom tbe ooolysls eocb yeot becoose tbey
otteoJeJ speclol eJocotloo scbools, * loJlcotes tbot tbe ptoboblllty tbot tbe Jlffeteoces ote tooJom ls
less tboo 5 petceot, ** ptoboblllty less tboo 1 petceot, *** ptoboblllty less tboo .1 petceot.

8een eL al. (2011a) also compared Lhe average characLerlsLlcs of Lhe nelghborhoods surroundlng Lhe
schools aLLended by sLudenLs ln grades one Lhrough seven before and afLer a school move by
foreclosure sLaLus. 1able 13 below provldes deLalls.

1ab|e 13: Compar|son of Mean Character|st|cs of Ne|ghborhoods Surround|ng Schoo|s Attended by Students
Grades 1 through 7 before and after a Schoo| Move by Iorec|osure Status
Cr|g|n Schoo|'s Ne|ghborhood
2006 to 2007
Dest|nat|on Schoo|'s
Ne|ghborhood
2007 to 2008
Change
between
Schoo| ears
Character|st|cs of Ne|ghborhoods
Surround|ng Schoo|s Attended by
Students |n 8u||d|ngs Lnter|ng
Iorec|osure Who Moved Schoo|s
- 8lack/Afrlcan Amerlcan
- Plspanlc/LaLlno
- Llvlng ln overLy
- Cwner-Cccupled unlLs
number of SLudenLs




48
27
24
33
1,998




39
28
23
30
1,936




-9***
0
-1
-3**
Character|st|cs of Ne|ghborhoods
Surround|ng Schoo|s Attended by
Students '"# |n 8u||d|ngs Lnter|ng
Iorec|osure Who Moved Schoo|s
- 8lack/Afrlcan Amerlcan
- Plspanlc/LaLlno
- Llvlng ln overLy
- Cwner-Cccupled unlLs
number of SLudenLs




30
32
24
28
89,393




28
29
22
29
89,238




-1
-3
-2***
0
5ootce. 8eeo et ol. (2011o), sllqbtly moJlfleJ by ootbots.
!"#$%& less tboo ooe petceot of stoJeots wete excloJeJ ftom tbe ooolysls eocb yeot becoose tbey
otteoJeJ speclol eJocotloo scbools, * loJlcotes tbot tbe ptoboblllty tbot tbe Jlffeteoces ote tooJom ls
less tboo 5 petceot, ** ptoboblllty less tboo 1 petceot, *** ptoboblllty less tboo .1 petceot.

As lllusLraLed ln 1able 13 above, moves, regardless of wheLher or noL Lhey were relaLed Lo foreclosure,
resulL ln desLlnaLlon nelghborhoods LhaL have a lower proporLlon of 8lacks/Afrlcan Amerlcans and a
lower proporLlon of people llvlng ln poverLy, buL noL a hlgher proporLlon of Plspanlcs/LaLlnos.
8egardless of Lhese flndlngs and as polnLed ouL above, moves, regardless of wheLher or noL Lhey are
relaLed Lo foreclosure, are dlsrupLlve and seem Lo have a negaLlve lmpacL on chlldren.

eLLlL and Comey (2012) sLudy Lhe relaLlonshlp beLween foreclosure and sLudenLs' resldenLlal and
school moblllLy and Lhe quallLy of Lhe new schools and nelghborhoods where foreclosed sLudenLs
relocaLe for Lhree clLles: new ?ork ClLy, 8alLlmore, and WashlngLon, uC. 1hey uLlllze Lhree unlque local
daLa seLs: flrsL, sLudenL-level publlc school admlnlsLraLlve records, second, properLy-level foreclosure
daLa and parcel-level houslng lnformaLlon, and Lhlrd, school-level flles. 1he analyzed clLles have dlfferenL
houslng markeLs, dlfferenL foreclosure processes, and dlfferenL school enrollmenL pollcles, yeL Lhe
proporLlon of sLudenLs affecLed was slmllar, ranglng from 1.8 (ln new ?ork ClLy) Lo 2.7 percenL (ln
8alLlmore) for Lhe mosL recenL school year for whlch daLa was avallable. eLLlL and Comey (2012) also
flnd LhaL Lhe proporLlon of 8lack/Afrlcan Amerlcan sLudenLs who llve ln a foreclosed home as compared

Notloool commoolty kelovestmeot coolltloo - bttp.//www.octc.otq - 202-628-8866 20

Lo oLher groups ls qulLe hlgh: 90 percenL ln 8alLlmore, 88 percenL ln WashlngLon, uC, and 37 percenL ln
new ?ork ClLy.

WlLh regard Lo resldenLlal moblllLy, 1able 14 below presenLs Lhe characLerlsLlcs of orlgln and desLlnaLlon
nelghborhoods for all sLudenLs and for sLudenLs lmpacLed by foreclosure who moved ln 8alLlmore and ln
WashlngLon, uC.

1ab|e 14: Character|st|cs of Cr|g|n and Dest|nat|on Ne|ghborhoods for A|| Students and Iorec|osed Students who
Moved |n 8a|t|more and |n Wash|ngton, DC

Cr|g|n:
A|| Students
Cr|g|n:
Students |n
Iorec|osed
nomes
Dest|nat|on:
A|| Students
Dest|nat|on:
Students |n
Iorec|osed
nomes
D|fference:
A|| Students
D|fference:
Students |n
Iorec|osed
nomes
8a|t|more
number of
arL 1
Crlmes
13

64 61 61 60 -3 -1
number of
!uvenlle
ArresLs
16

134 122 127 131 -7 9
ercenL
vacanL and
Abandoned
Pomes
12 10 11 11 -1.1 0.9
Medlan Pome
Sales rlce
$124,743 $123,238 $123,736 $123,033 $1,013 ($2,203)
ercenL
8ecelvlng
lree or
8educed rlce
Meals
67 66 39 60 -8.2 -6.0
Wash|ngton,
DC

number of
vlolenL
Crlmes
17

30 47 48 43 -2 -4
number of
roperLy
Crlmes
18

18 18 19 20 1 2
ercenL of
Pouseholds
8ecelvlng
1Anl
14 13 13 17 1.0 2.0
ercenL of
Pouseholds
8ecelvlng
lood SLamps
29 29 29 32 0.0 3.0
5ootce. lettlt ooJ comey (2012), p. 28, sllqbtly moJlfleJ by ootbots

1able 14 above shows LhaL sLudenLs lmpacLed by foreclosure ln 8alLlmore moved Lo nelghborhoods wlLh
sllghLly lower numbers of crlmes, hlgher numbers of arresLs, sllghLly lower proporLlons of vacanL and
abandoned homes, lower medlan home sales prlces, and lower proporLlons of sLudenLs who recelve free
or reduced prlce meals aL school. loreclosed sLudenLs ln WashlngLon, uC, however, moved Lo
nelghborhoods wlLh a lower number of vlolenL crlmes, a sllghLly hlgher number of properLy crlmes, and
sllghLly hlgher proporLlons of households recelvlng 1Anl and food sLamps. Lxpandlng Lhe analysls, uslng

13
er 1,000 resldenLs.
16
er 1,000 [uvenlles.
17
er 1,000 resldenLs.
18
er 1,000 resldenLs.

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mulLlvarlaLe regresslon, eLLlL and Comey (2012) flnd LhaL sLudenLs ln homes ln foreclosure who moved
ln 8alLlmore and WashlngLon, u.C., dld noL end up ln slgnlflcanL dlfferenL quallLy nelghborhoods Lhan
oLher sLudenLs who moved, wlLh Lhe excepLlon of one nelghborhood lndlcaLor ln 8alLlmore. [.]
SLudenLs ln foreclosed homes ln 8alLlmore moved Lo nelghborhoods wlLh slgnlflcanL lncreases ln Lhe
[uvenlle arresL raLe, conLrolllng for oLher sLudenL and nelghborhood characLerlsLlcs" (p. 28).

1able 13 below presenLs Lhe characLerlsLlcs of orlgln and desLlnaLlon schools for all sLudenLs and for
foreclosed sLudenLs who moved ln 8alLlmore, ln WashlngLon, uC, and ln new ?ork ClLy, based on eLLlL
and Comey (2012).

1ab|e 1S: Character|st|cs of Cr|g|n and Dest|nat|on Schoo|s for A|| and for Iorec|osed Students Who Moved |n
8a|t|more, |n Wash|ngton, DC, and |n New ork C|ty
Cr|g|n:
A|| Students
Cr|g|n:
Students |n
Iorec|osed
nomes
Dest|nat|on:
A|| Students
Dest|nat|on:
Students |n
Iorec|osed
nomes
D|fference: A||
Students
D|fference:
Students |n
Iorec|osed
nomes
8a|t|more
19

8lack/Afrlcan Amerlcan 92 93 91 91 -0.6 -1.9
Plspanlc/LaLlno 2 2 2 2 0.1 0.1
8ecelvlng lree or 8educed
rlce Meals
70 70 63 63 -7.3 -6.8
1esLlng roflclenL or
Advanced on 8eadlng
64 64 66 67 1.4 2.7
1esLlng roflclenL or
Advanced on MaLh
32 32 34 36 2.0 3.9
number of SLudenLs 18,343 374
Wash|ngton, DC
20

8lack/Afrlcan Amerlcan 83 90 88 87 2.7 -2.7
Plspanlc/LaLlno 11 8 8 10 -2.8 1.7
8ecelvlng lree or 8educed
rlce Meals
69 70 66 68 -3.4 -2.2
1esLlng roflclenL or
Advanced on 8eadlng
40 38 40 37 0.2 -0.7
1esLlng roflclenL or
Advanced on MaLh
36 34 37 34 1.2 0.4
number of SLudenLs 18,712 223
New ork C|ty
21

8lack/Afrlcan Amerlcan 31 30 32 47 1.1 -3.0
Plspanlc/LaLlno 41 34 40 33 -1.1 1.0
8ecelvlng lree or
8educed rlce Meals
77 81 74 78 -3.2 -3.0
1esLlng roflclenL or
Advanced on 8eadlng
37 33 31 48 -3.4 -3.0
1esLlng roflclenL or
Advanced on MaLh
77 74 63 62 -12.4 -12.0
number of SLudenLs 91,393 1,998
5ootce. lettlt ooJ comey (2012), p. JJ, sllqbtly moJlfleJ by ootbots.

1able 13 above presenLs a mlxed plcLure regardlng orlgln and desLlnaLlon schools ln Lhe Lhree sLudy
communlLles. Whlle sLudenLs (of any race and eLhnlclLy) from foreclosed homes move Lo nelghborhoods
wlLh a lower proporLlon of 8lacks/Afrlcan Amerlcans and a lower proporLlon of free or reduced prlce

19
Crades k-11
20
Crades S-11
21
Crades 1-7

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meal reclplenLs, Lhey move Lo nelghborhoods wlLh a hlgher proporLlon of Plspanlcs/LaLlnos. ln Lerms of
academlc achlevemenLs, flndlngs were mlxed. ln 8alLlmore, sLudenLs moved Lo schools LhaL have a
sllghLly hlgher proporLlon of sLudenLs who LesL proflclenL or advanced ln boLh readlng and maLh.

ln WashlngLon, uC, sLudenLs moved Lo schools wlLh a sllghLly lower proporLlon of sLudenLs LesLlng
proflclenL or advanced ln readlng buL wlLh a sllghLly hlgher proporLlon of sLudenLs LesLlng proflclenL or
advanced ln maLh. ln new ?ork ClLy, however, sLudenLs moved Lo schools LhaL have a lower proporLlon
of sLudenLs who LesL proflclenL or advanced ln boLh readlng and maLh. 1hese mlxed flndlngs ralse
quesLlons abouL Lhe lmpacL of Lhe foreclosure crlsls on Lhe educaLlonal opporLunlLles of chlldren and Lhe
lmpllcaLlons of educaLlonal opporLunlLles on Lhelr fuLure opporLunlLles for bulldlng wealLh. More
research should be underLaken for oLher clLles ln Lerms of orlgln and desLlnaLlon schools for sLudenLs
who moved Lrlggered by a foreclosure.

Whlle eLLlL and Comey (2012) flnd mlxed lmpacLs of Lhe foreclosure crlsls on chlldren, oLher sLudles
flnd a negaLlve lmpacL, for example on academlc achlevemenL (8lrman eL al., 1994, kerbow eL al., 2003,
1ucker eL al., 1998). 8osengren (2010), for example, flnds a poslLlve correlaLlon beLween a hlgh
concenLraLlon of 8LC properLles and negaLlve educaLlon ouLcomes, lncludlng Lhe hlgh school dropouL
raLe and Lhe proporLlon of sLudenLs who falled Lhe sLaLewlde sLandardlzed maLh LesL (see also Comey &
Crosz, 2010 and kachura, 2011).

ln a meLa-sLudy of Lhe effecL of resldenLlal moblllLy on chlldren's healLh ouLcomes over Lhelr llfe course,
!elleyman and Spencer (2008) conclude LhaL hlgh frequency resldenLlal change ls poLenLlally a useful
marker for Lhe cllnlcal rlsk of behavloral and emoLlonal problems" (p. 384). lssues ldenLlfled were hlgher
levels of behavloral and emoLlonal problems, lncreased Leenage pregnancy raLes, acceleraLed lnlLlaLlon
of llllclL drug use, adolescenL depresslon, and reduced conLlnulLy of healLhcare.

1he Impact of the Iorec|osure Cr|s|s and the Great kecess|on on Sma|| 8us|ness I|nanc|ng
lor mosL low- and moderaLe-lncome people, bulldlng home equlLy ls Lhe mosL lmporLanL and Lyplcally
Lhe only sLraLegy Lo bulld wealLh (8elsky and 8eLslnas, 2003). Whlle some bulld home equlLy for Lhe long
run, oLhers bulld equlLy Lo leverage for oLher lnvesLmenLs. 8egardlng Lhe former, some bulld home
equlLy Lo llve renL-free durlng Lhelr reLlremenL, oLhers bulld home equlLy Lo sell Lhelr homes Lo flnance
Lhelr sLay ln asslsLed llvlng or a nurslng home or Lo leave wealLh behlnd. Some buyers bulld home equlLy
as collaLeral or dlrecL flnanclng for hlgher educaLlon loans for Lhelr chlldren or grandchlldren (or posslbly
Lhemselves) whlle oLhers bulld home equlLy as collaLeral for a loan Lo sLarL a new buslness. SomewhaL
surprlslngly, all of Lhese aspecLs have been under-researched ln Lhe recenL and dlsLanL pasL due Lo a
scarclLy of recenL daLa (see Lhe dlscusslon below). 1hls dearLh ls especlally surprlslng ln Lhe currenL
economlc conLexL glven Lhe role of houslng Lo flnance small buslnesses and Lhe exLenslve aLLenLlon Lhe
need Lo supporL small buslnesses has recelved. lnLeresLlngly, Lhere does noL seem Lo be much
lnformaLlon on Lhe connecLlon beLween Lhe foreclosure crlsls and lLs effecL on small buslness flnanclng.
More recenL daLa should be collecLed and more research should be underLaken Lo close Lhls gap ln
knowledge.

ln Lhe followlng secLlons, we focus on Lhe connecLlon beLween home equlLy and small buslness
flnanclng. Clven Lhe llmlLed daLa, Lhere are Lwo angles Lo approach Lhls quesLlon: (a) morLgage daLa and
(b) enLrepreneurshlp daLa.


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8egardlng morLgage daLa, Lhe 2001 8esldenLlal llnance Survey (8lS), sponsored by 1he ueparLmenL of
Pouslng and urban uevelopmenL (Puu) and conducLed by Lhe u.S. 8ureau of Lhe Census, was deslgned
Lo provlde daLa abouL Lhe flnanclng of nonfarm, prlvaLely owned, resldenLlal properLles" (u.S. 8ureau
of Lhe Census, 2001, n.p.). lL ls based on malled quesLlonnalres senL Lo a sample of properLy owners and
Lo lenders who held morLgages on Lhe sample properLles, based on 30,000 addresses from Lhe 2000
Census. 1able 16 below provldes a breakdown of Lhe reasons for Laklng ouL a home equlLy llne of credlL
(PLLCC), one of Lhe quesLlons ln Lhe 8lS. ln 2001, only Lwo percenL of PLLCC borrowers Look ouL a
PLLCC Lo sLarL a buslness.

1ab|e 16: keasons for 1ak|ng out a nome Lqu|ty L|ne of Cred|t by S|ng|e-Iam||y nomeowners w|th a nome Lqu|ty
L|ne of Cred|t
1991 2001
Make add|t|ons, |mprovements, or repa|rs to the property 43 34
Conso||date debts 26 21
urchase auto or other veh|c|e 9 10
ay for educat|on or med|ca| expenses 4 6
Cther types of |nvestments 4 4
Investment |n other rea| estate 3 3
Cther purposes
22
9 3
5ootce. covooooqb (2007) (llqote 1), boseJ oo 1991 ooJ 2001 kl5

Whlle Lhere are oLher proprleLary morLgage daLa seLs, such as Lender rocesslng Servlces (LS) and
8lack 8ook, nelLher provldes lnformaLlon abouL wheLher Lhe loan purpose was Lo flnance a buslness.

8egardlng enLrepreneurshlp daLa, Lhere are Lhree daLa sources LhaL provlde lnformaLlon of lnLeresL. 1he
flrsL daLa source ls Lhe kauffman llrm Survey (klS) of Lhe kauffman loundaLlon. 1he second daLa source
ls Lhe anel SLudy of LnLrepreneurlal uynamlcs (SLu), admlnlsLered by 1he unlverslLy of Mlchlgan and
sponsored by Lhe Lwlng Marlon kauffman loundaLlon, Lhe naLlonal Sclence loundaLlon (nSl), Lhe Small
8uslness AdmlnlsLraLlon (S8A), and Lhe unlverslLy of Mlchlgan. 1he Lhlrd daLa source ls Lhe Small
8uslness and Access Lo CredlL survey, admlnlsLered and funded by Lhe nll8 (naLlonal lederaLlon of
lndependenL 8uslness) 8esearch loundaLlon. We wlll dlscuss Lhese sources of lnformaLlon ln deLall
below, focuslng on Lhe connecLlon beLween home equlLy and small buslness flnanclng.

1he klS has been admlnlsLered slnce 2004, when Lhe loundaLlon sLarLed sendlng a survey Lo a cohorL of
nearly 3,000 flrms. 1hls cohorL ls Lracked annually and asked several hundred quesLlons on a range of
Loplcs, lncludlng Lhe background of Lhe founders, Lhe sources and amounLs of flnanclng, flrm sLraLegles
and lnnovaLlons, and ouLcomes such as sales, proflLs, and survlval (kauffman loundaLlon, n.d.).
CurrenLly, survey daLa from 2004 Lhrough 2008 are publlcly avallable.

Cne of Lhe quesLlons relaLed Lo our research quesLlon ls uld you use personal loans [from] a bank Lo
flnance Lhe operaLlon [?]"
23
1able 17 below provldes lnformaLlon on responses.

22
lncludes response caLegorles noL used ln 1991: 1o sLarL a buslness" (2 percenL), 1o purchase oLher consumer producLs" (1
percenL), 1o pay Laxes" (1 percenL), 1o seLLle a dlvorce" (1 percenL) (Cavanaugh, 2007, p. 1).
23
1he llLeral quesLlon was as follows: AnoLher way Lo flnance a buslness ls debL flnanclng. uebL ls money borrowed LhaL has Lo
be pald back wlLh or wlLhouL lnLeresL. l'm golng Lo ask you abouL some dlfferenL Lypes of debL flnanclng you may have used on
behalf of [nAML 8uSlnLSS] Lo flnance Lhe operaLlon of Lhe buslness. lor each, please Lell me lf you used Lhls Lype aL any Llme
durlng calendar year [2004, 2003, 2006, 2007, 2008]. uld you use personal loans from a bank or oLher flnanclal lnsLlLuLlon, such


Notloool commoolty kelovestmeot coolltloo - bttp.//www.octc.otq - 202-628-8866 24


1ab|e 17: kesponses to uest|on "D|d you use persona| |oans [from] a bank to f|nance the operat|on?"
Abso|ute Number
(roport|on)
kesponse: es kesponse: No 1ota| Number of
kesponses
2004 807
(16.36)
4,067
(83.44)
4,874
(100)
200S 313
(13.36)
3,464
(87.06)
3,979
(100)
2006 419
(12.31)
2,986
(87.69)
3,403
(100)
2007 296
(10.12)
2,629
(89.88)
2,923
(100)
2008 260
(9.93)
2,334
(90.03)
2,614
(100)
5ootce. kooffmoo loooJotloo (o.J.), colcolotloos of totols ooJ ptopottloos ooJettokeo by ootbots

Whlle 1able 17 does noL answer wheLher a home served as collaLeral, lL neverLheless lllusLraLes LhaL Lhe
proporLlons of respondenLs who used personal loans has decreased from 16.36 percenL ln 2004 Lo 9.93
percenL ln 2008.

1he SLu research program was launched Lo enhance Lhe undersLandlng of how people sLarL
buslnesses, based on naLlonally represenLaLlve samples of nascenL enLrepreneurs. SLu l began wlLh
screenlng ln 1998 Lo 2000, held a cohorL of 830, and had Lhree follow-up lnLervlews. SLu ll began wlLh
screenlng ln 2003/2006 and a cohorL slze of 2,044, and wlll have slx annual lnLervlews. Slu l had
quesLlonnalres ln slx waves. Wave A conLalns a quesLlonnalre LhaL has several quesLlons ln SecLlon L:
SLarL-up llnances, for example
24
:

CuesLlon L1: Pave flnanclal lnsLlLuLlons or oLher people been asked for funds for Lhls new buslness, do
you expecL Lo for funds ln Lhe fuLure [slc], or ls ouLslde flnanclal supporL noL relevanL for Lhls new
buslness?
Answer Cholces L1: (a) yes, (b) no, noL yeL, expecL Lo ask, (c) no, noL relevanL

CuesLlon L2: ln whaL monLh and year dld you flrsL seek ouLslde fundlng for Lhls new buslness?
Answer L2: [monLh/year]

CuesLlon L3: Pave you recelved Lhe flrsL ouLslde fundlng from flnanclal lnsLlLuLlons or oLher people for
Lhls new buslness?
Answer Cholces L3: (a) yes, (b) no

CuesLlon L4: ln whaL monLh and year dld Lhe flrsL ouLslde fundlng begln for Lhls new buslness?
Answer L4: [monLh/year]

CuesLlon L3: Pas credlL wlLh a suppller been esLabllshed, wlll credlL wlLh a suppller be esLabllshed, or ls
Lhls noL relevanL Lo Lhe new buslness?

as a morLgage or home equlLy loan used for Lhe buslness?" Source: hLLp://www.kauffman.org/kfs/klSWlkl/uaLa-
ulcLlonary/8ase-Llne/f7a_pers_loan_bank_0.aspx
24
Source: hLLp://www.psed.lsr.umlch.edu/psed/daLa (CuesLlonnalres: 1. Wave A CuesLlonnalre, quesLlonnalres ln Waves 8
Lhrough l are very slmllar Lo Wave A). nelLher quesLlonnalre conLalns a quesLlon abouL wheLher home equlLy loans were used
Lo esLabllsh Lhe buslness.

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Answer Cholces L3: (a) yes, (b) no, noL yeL, expecL Lo ask, (c) no, noL relevanL

CuesLlon L6: ln whaL monLh and year was suppller credlL flrsL esLabllshed?
Answer L6: [monLh/year]

llnally, Lhe nll8 8esearch loundaLlon, Lhe naLlon's largesL small and lndependenL buslness advocacy
organlzaLlon" (uennls, 2011, n.p.), asked 1he Callup CrganlzaLlon Lo conducL Lhe Small 8uslness and
Access Lo CredlL survey ln laLe 2011. 1he sampllng frame of small employers was based on flles of Lhe
uun & 8radsLreeL CorporaLlons. A small employer was deflned as a buslness owner employlng no less
Lhan one lndlvldual ln addlLlon Lo Lhe owner(s) and no more Lhan 230" (uennls, 2011, p. 73). 8ased on a
sLraLlfled random sample, 836 lnLervlews were compleLed. 1hls survey conLalned 26 quesLlons wlLh
several follow-up quesLlons for some quesLlons, followed by 12 demographlc quesLlons. 1able 18 below
shows selecL real esLaLe flnance characLerlsLlcs for owned real esLaLe by Lhe lnLervlewed small
employers from 2008 Lo 2011.

1he homeownershlp raLe for small employers ls dlsproporLlonaLely hlgh compared Lo Lhe general
populaLlon, whlle Lhe proporLlon of owners who have an underwaLer morLgage ls dlsproporLlonaLely
low. Whlle nlne percenL of employers reporLed Lo have used Lhelr resldence as collaLeral ln 2008, 6
percenL used lL as collaLeral ln 2009, 7 percenL used lL ln 2010, and 11 percenL used lL ln 2011 (see de
SoLo (2000) for alLernaLlve lnslghLs for developlng counLrles). 1hese proporLlons are almosL always
hlgher for buslness and lnvesLmenL real esLaLe (versus owner-occupled resldences). SchwelLzer and
Shane (2010) dlscuss a proprleLary quarLerly survey conducLed by 8arlow 8esearch whlch found LhaL ln
2007, 20.3 percenL of Lhe buslness owners reporLed pledglng Lhelr homes as collaLeral for Lhelr
buslnesses and 18.2 percenL sald [LhaL] Lhey borrowed agalnsL Lhelr homes Lo obLaln a personal loan
where Lhe proceeds were used Lo flnance a small buslness" (SchwelLzer and Shane, 2010, p. 2). 1hus,
we conclude LhaL boLh Lhe buslness and Lhe lnvesLmenL real esLaLe markeL and also Lhe resldenLlal real
esLaLe markeL have an effecL on small buslness flnanclng.

Whlle 1able 18 below presenLs descrlpLlve sLaLlsLlcs wlLh correlaLlons, lL would be lnLeresLlng Lo
underLake fuLure research wlLh lnferenLlal sLaLlsLlcs LhaL analyze Lhe causaLlon beLween Lhe foreclosure
crlsls and small buslness flnanclng, posslbly asslsLed by lnLervlews.

1ab|e 18: Sma|| Lmp|oyer Cwned kea| Lstate by Se|ected kea| Lstate I|nance Character|st|c: 2008 to 2011
Character|st|c kes|dent|a| 8us|ness Investment A|| kea| Lstate
2008
2009
2010
2011
1oLal Cwned MorLgage 1oLal Cwned MorLgage 1oLal Cwned MorLgage 1oLal Cwned MorLgage
Cwn (at |east
one)
93
93
94
89
37
37
36
22
41
39
37
36
96
93
93
92

1
st
Mortgage 69
63
61
64
72
67
63
71
24
20
19
14
63
33
63
63
22
21
18
19
32
32
49
34
73
71
68
71
78
73
71
77

2
nd
Mortgage 18
17
16
13
19
18
17
16
27
27
26
23
2
2
1
1
4
6
4
6
7
7
7
9
1
3
2
3
4
4
3
8
7
7
9
9
21
20
17
17
21
21
18
18
27
28
23
24

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Character|st|c kes|dent|a| 8us|ness Investment A|| kea| Lstate
2008
2009
2010
2011
1ota| Cwned Mortgage 1ota| Cwned Mortgage 1ota| Cwned Mortgage 1ota| Cwned Mortgage
Ups|de-Down 8
9
6
14
9
10
7
16
13
13
10
22
1
3
1
2
4
2
4
11
6
6
6
17
3
3
3
4
6
6
8
11
12
12
13
13
11
13
8
18
11
14
9
20
14
19
12
26
Mortgaged
for 8us|ness
urposes
18
16
13
14
19
17
16
16
26
23
24
22
3
6
2
3
9
16
9
22
20
20
20
33
2
3
2
3
6
6
3
10
11
11
9
18
23
21
17
19
24
22
18
21
30
29
21
26
Used as
Co||atera|
9
6
7
11
10
7
7
12
13
10
11
17
7
4
4
3
19
11
19
24
30
30
30
38
2
3
2
2
3
3
6
3
10
10
12
9
16
11
11
13
17
14
11
16
21
16
16
21
N 690
633
734
737
634
618
693
672
471
416
437
478
690
633
734
737
324
248
324
239
198
133
198
137
690
633
734
737
314
278
310
286
138
168
166
138
690
633
734
734
668
609
708
688
339
472
337
340
5ootce. ueools (2012) (1oble 9 lo ueools (2012), teottooqeJ by ootbots)

1he Impact of the Iorec|osure Cr|s|s and the Great kecess|on on the rospects for Wea|th 8u||d|ng
(Inc|ud|ng nomeownersh|p) for Iam|||es and Commun|t|es of Co|or
1he prospecLs for wealLh bulldlng, lncludlng homeownershlp, for famllles and communlLles of color wlll
depend noL only on Lhe speed of Lhe economlc recovery buL also on Lhe fuLure of Lhe CovernmenL
Sponsored LnLerprlses (CSLs, dlscussed below) and Lhe deflnlLlon of Lhe Cuallfled 8esldenLlal MorLgage
(C8M, see Carr eL al. (2011), among oLhers), as homeownershlp ls crlLlcal when lL comes Lo bulldlng
wealLh. 1he wealLh dlsparlLy beLween non-Plspanlc WhlLes and people of color ls prlmarlly aLLrlbuLable
Lo Lhe subsLanLlally hlgher homeownershlp raLe for Lhe former group, along wlLh Lhe locaLlon of Lhose
properLles. 1he economlc crlsls, lncludlng Lhe foreclosure crlsls, has wldened Lhe wealLh gap, and plans
Lo resLrucLure Lhe morLgage markeL wlll need Lo facLor ln affordable homeownershlp, lncludlng
affordable homeownershlp for borrowers of color.

ln SepLember 2009, Lhe u.S. CovernmenL AccounLablllLy Cfflce (CAC) revlewed sLudles and daLa, and
lnLervlewed houslng flnance experLs and offlclals from Lhe enLerprlses, Lhe lederal Pouslng llnance
Agency (lPlA), ueparLmenLs of Lhe 1reasury and Lhe u.S. ueparLmenL of Pouslng and urban
uevelopmenL, Lhe lederal 8eserve, lenders, and communlLy groups. 1hey ouLllne Lhe followlng Lhree
opLlons, whlch generally fall along a conLlnuum wlLh some overlap ln key areas:
"8econsLlLuLe Lhe enLerprlses as for-proflL corporaLlons wlLh governmenL sponsorshlp buL place
addlLlonal resLrlcLlons on Lhem [.],
LsLabllsh Lhe enLerprlses as governmenL corporaLlons or agencles [.], and
rlvaLlze or LermlnaLe Lhem. (u.S. CovernmenL AccounLablllLy Cfflce, 2009, n.p.)

More speclflcally, Lhe CAC provldes a summary of lmpllcaLlons of Lhe opLlons Lo revlse Lhe enLerprlses'
sLrucLures, glven ln 1able 19 below.









Notloool commoolty kelovestmeot coolltloo - bttp.//www.octc.otq - 202-628-8866 27

1ab|e 19: Summary of Imp||cat|ons of the Cpt|ons to kev|se the Lnterpr|ses' Structures
keestab||sh as
Government-Sponsored
Lnterpr|ses (GSLs)
Lstab||sh Government
Corporat|on or Agency
r|vat|ze or 1erm|nate
Ab|||ty to prov|de ||qu|d|ty
and support to mortgage
markets
8econsLlLuLlng Lhe
enLerprlses as CSLs may
provlde llquldlLy and oLher
beneflLs Lo morLgage
flnance durlng normal
economlc Llmes. Powever,
as for-proflL enLlLles, Lhelr
capaclLy Lo supporL
houslng flnance durlng
sLressful economlc perlods
ls open Lo quesLlon.
A governmenL enLlLy, wlLh
access Lo 1reasury-lssued
debL, may be poslLloned
Lo provlde morLgage
llquldlLy durlng normal
and sLressful economlc
perlods. 8uL, wlLhouL a
porLfollo Lo hold
morLgages, lLs capaclLy Lo
do Lhe laLLer also may be
llmlLed. 1reasury or Lhe
lederal 8eserve may need
Lo sLep ln and purchase
morLgage asseLs under
such clrcumsLances.
lf oLher flnanclal
lnsLlLuLlons assumed key
enLerprlse acLlvlLles such
as morLgage purchases
and M8S lssuance, a llquld
morLgage markeL could be
reesLabllshed ln normal
economlc Llmes. 8uL,
prlvaLe morLgage lendlng
has collapsed ln Lhe
currenL recesslon. A
federal morLgage lnsurer
could help ensure LhaL
prlvaLe lenders provlde
morLgage fundlng ln
sLressful economlc
perlods.
Support hous|ng
opportun|t|es for targeted
groups
lor-proflL sLaLus and
ellmlnaLlon of morLgage
porLfollos could llmlL
enLerprlses' capaclLy Lo
fulflll Lhls ob[ecLlve. 8uL,
permlLLlng smaller
morLgage porLfollos,
expandlng lPA programs,
or provldlng dlrecL
flnanclal asslsLance Lo
LargeLed borrowers could
be alLernaLlves.
MlghL be expecLed Lo
perform Lhls funcLlon as a
publlc enLlLy. 8uL, may
face challenges
lmplemenLlng a program
Lo purchase morLgages for
such groups lf Lhey cannoL
hold Lhese morLgages ln
porLfollo. lPA lnsurance
programs could be
expanded as an
alLernaLlve.
Would ellmlnaLe
LradlLlonal basls
(governmenL sponsorshlp)
for prevlous programs
LhaL requlred enLerprlses
Lo serve morLgage credlL
needs of LargeLed groups.
8uL, a federal morLgage
lnsurer could be requlred
Lo esLabllsh such
programs due Lo lLs
governmenL sponsorshlp.
otent|a| safety and
soundness concerns
AlLhough addlLlonal
regulaLlons could
mlnlmlze rlsks, safeLy and
soundness concerns may
remaln as Lhls opLlon
would preserve Lhe
enLerprlses' prevlous
sLaLus as for-proflL
corporaLlons wlLh
governmenL sponsorshlp.
May mlLlgaLe rlsk due Lo
lack of proflL moLlve and
Lhe ellmlnaLlon of exlsLlng
morLgage porLfollos.
Powever, managlng Lhe
enLerprlses' ongolng M8S
buslness sLlll would be
complex and rlsky, and a
governmenL enLlLy may
lack Lhe sLafflng and
Lechnology Lo do so
effecLlvely.
ln one scenarlo, rlsks
would decrease as
morLgage lendlng would
be dlspersed among many
lnsLlLuLlons. 8uL, large
lnsLlLuLlons LhaL assumed
funcLlons such as M8S
lssuance may be vlewed
as Loo blg Lo fall, whlch
could lncrease rlsks. A
federal morLgage lnsurer
also may noL charge
premlums LhaL reflecL lLs
rlsks.
key e|ements for
potent|a| regu|atory and
overs|ght structure
8educe or perhaps
ellmlnaLe Lhe enLerprlses'
morLgage porLfollos,
lncrease caplLal sLandards
and lmpose regulaLlons,
such as execuLlve
compensaLlon llmlLs, and
esLabllsh new ownershlp
sLrucLures, as approprlaLe.
8equlre flnanclal
dlsclosures Lo help ensure
Lransparency and provlde
congresslonal overslghL of
Lhe enLerprlses' and
lPlA's performance.
rovlde enLlLy wlLh
flexlblllLy Lo hlre sLaff and
obLaln necessary
Lechnology. LsLabllsh rlsk-
sharlng arrangemenLs
wlLh Lhe prlvaLe secLor,
approprlaLe dlsclosures of
rlsks and llablllLles ln Lhe
federal budgeL Lo help
ensure Lransparency, and
robusL congresslonal
overslghL of operaLlons.
lragmenLed u.S. flnanclal
regulaLory sLrucLure
would need Lo be revlsed,
as CAC has ldenLlfled ln
prevlous reporLs, Lo help
oversee rlsks of large
lnsLlLuLlons LhaL may
assume enLerprlse
funcLlons or acqulre Lhelr
asseLs. CverslghL sLrucLure
for a federal morLgage
lnsurer also would need Lo
be esLabllshed.
5ootce. u.5. Covetomeot Accoootoblllty Offlce (2009)

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ln uecember 2010, 1he Congresslonal 8udgeL Cfflce (C8C) subsequenLly dlscussed Lhree broad
approaches for Lhe fuLure of Lhe secondary morLgage markeL, glven Lhe cosL Lo Laxpayers of Lhe
governmenL Lakeover of Lhe CSLs and glven Lhe sLrucLural weaknesses LhaL conLrlbuLed Lo Lhe flnanclal
problems of Lhe CSLs. 1hose alLernaLlves could Lake one of Lhe followlng forms:

Pybrld publlc/prlvaLe model ln whlch Lhe governmenL would help Lo ensure a sLeady supply of
morLgage flnanclng by provldlng expllclL guaranLees on prlvaLely lssued morLgages or M8Ss LhaL
meL cerLaln quallflcaLlons,
lully publlc model ln whlch a wholly federal enLlLy would guaranLee quallfylng morLgages or
M8Ss, or
lully prlvaLe model ln whlch Lhere would be no speclal federal backlng for Lhe secondary
morLgage markeL (Congresslonal 8udgeL Cfflce, 2010, p. vll).

1able 20 below lllusLraLes Lhe key feaLures of alLernaLlves for Lhe secondary morLgage markeL. 1able 21
below lllusLraLes Lhe key facLors for assesslng alLernaLlves for Lhe secondary morLgage markeL. 8oLh
Lables address common deslgn lssues, such as how Lo sLrucLure and prlce any federal credlL guaranLees,
wheLher and how Lo supporL affordable houslng, and how Lo sLrucLure and regulaLe Lhe secondary
markeL.

1ab|e 20: key Ieatures of A|ternat|ves for the Secondary Mortgage Market

nybr|d ub||c]r|vate
Mode|
Iu||y Iedera| Agency Iu||y r|vate Market
Lx|st|ng operat|ng assets of
Iann|e Mae and Iredd|e
Mac
Panded over Lo speclallzed
lssuers of federally backed
M8Ss (could be non-proflL,
cooperaLlve, or prlvaLe
flrms), sold Lo prlvaLe-label
lssuers, or llquldaLed
used for operaLlons of
agency, sold Lo prlvaLe-label
lssuers, or llquldaLed
Sold Lo prlvaLe-label lssuers
or llquldaLed
L|censes to |ssue federa||y
guaranteed M8Ss
under publlc-uLlllLy
model," only a few, under
compeLlLlve markeL-maker
model," avallable Lo any
flrm meeLlng speclfled
crlLerla
none, operaLlons
underLaken by agency
none
Iedera| guarantees for
|oans or M8Ss
LxpllclL, posslbly coverlng
only caLasLrophlc rlsks
LxpllclL none (phased ouL)
r|vate cap|ta|'s ro|e |n
secondary market
Absorbs mosL or all losses,
excepL ln cases of unusually
large shocks
none on federally
guaranLeed securlLles,
absorbs all losses on
prlvaLe-label securlLles
Absorbs all losses
A||owab|e act|v|t|es for
federa||y guaranteed
secur|t|zers
under publlc-uLlllLy
model," resLrlcLed Lo
lssulng M8Ss and holdlng
very llmlLed porLfollos,
under compeLlLlve markeL-
maker model," resLrlcLed
only enough Lo llmlL
splllover of rlsk Lo
governmenL
lssulng guaranLees and
posslbly holdlng porLfollos
of morLgages and M8Ss
noL appllcable
Support for affordab|e
hous|ng
Could occur Lhrough Lerms
on federal guaranLees, fees
on lssuers of federally
backed M8Ss, or
governmenL agencles

Could occur Lhrough agency no speclal role, could occur
Lhrough governmenL
agencles
ko|e of |ssuers of pr|vate-
|abe| M8Ss
Serve borrowers whose
morLgages do noL quallfy
for federal guaranLees
Serve borrowers whose
morLgages do noL quallfy
for federal guaranLee
uomlnanL players ln
secondary markeL, along
wlLh oLher prlvaLe flnanclal
lnsLlLuLlons
5ootce. cooqtessloool 8oJqet Offlce (2010)

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1ab|e 21: key Iactors for Assess|ng A|ternat|ves for the Secondary Mortgage Market
nybr|d ub||c]r|vate
Mode|
Iu||y Iedera| Agency Iu||y r|vate Market
Supp|y of f|nanc|ng for
mortgages
under normal markeL
condlLlons, Lhe supply of
fundlng for federally backed
morLgages would be falrly
sLable. uurlng perlods of
markeL sLress, flnanclng
could become less
avallable, especlally under
verslons wlLh narrower
federal guaranLees and
more rellance on prlvaLe
caplLal.
1he supply of fundlng for
federally backed morLgages
would be falrly sLable-
boLh ln normal Llmes and
durlng perlods of markeL
sLress-because
uncerLalnLy abouL Lhe
sLrengLh of Lhe federal
guaranLee would be
mlnlmlzed.
1he markeL would be more
suscepLlble Lo flucLuaLlons
ln Lhe supply of fundlng.
uurlng perlods of acuLe
markeL sLress, fundlng
could become exLremely
scarce wlLhouL federal
lnLervenLlon.
Support for affordab|e
hous|ng
MorLgages LhaL saLlsfled
affordable-houslng goals
could be subsldlzed Lhrough
lower federal guaranLee
fees, wlLh Lhe subsldy cosL
shown ln Lhe budgeL. Cr
responslblllLy could be
Lransferred Lo a fully
federal agency, such as Lhe
federal Pouslng
AdmlnlsLraLlon.
Subsldles could be
dellvered by Lhe agency and
would be shown ln Lhe
federal budgeL.
8esponslblllLy would be
Lransferred Lo a fully
federal agency, such as Lhe
lederal Pouslng
AdmlnlsLraLlon, or subsldles
would be dlsconLlnued.
1axpayer's exposure to r|sk lnLermedlarles ln Lhe
secondary markeL would
bear all credlL losses unLll
Lhelr caplLal was exhausLed,
llmlLlng Lhe credlL rlsk LhaL
Laxpayers would face.
lf only a few speclallzed
flrms parLlclpaLed ln Lhe
markeL, Lhey mlghL recelve
governmenL supporL lf Lhelr
solvency was LhreaLened.
1axpayers would bear Lhe
enLlre credlL rlsk on
guaranLeed morLgages.
rlvaLe-label lssuers seen as
crlLlcal Lo Lhe funcLlonlng of
Lhe morLgage markeL mlghL
recelve governmenL
supporL durlng perlods of
acuLe markeL sLress.
1axpayers' exposure Lo
credlL rlsk would be very
small under normal markeL
condlLlons. 1axpayers could
be exposed Lo greaLer rlsk
Lhrough federal deposlL
lnsurance lf banks bore
more credlL rlsk.
llrms seen as crlLlcal Lo Lhe
funcLlonlng of Lhe morLgage
markeL mlghL recelve
governmenL supporL durlng
perlods of acuLe markeL
sLress.
r|c|ng of federa|
guarantees
1he governmenL could have
Lrouble fully prlclng
caLasLrophlc rlsk or seLLlng
rlsk-senslLlve prlces, whlch
would probably shlfL some
cosL Lo Laxpayers.
1he governmenL probably
has weaker lncenLlves Lhan
prlvaLe guaranLors do Lo
charge fees LhaL would fully
compensaLe for Lhe rlsks
assoclaLed wlLh guaranLees,
suggesLlng LhaL Laxpayers
would probably bear a cosL.
no expllclL federal
guaranLees, however, any
lmpllclL federal guaranLees
LhaL arose would be free Lo
Lhe prlvaLe lssuers of M8Ss
and hence would enLall a
cosL Lo Laxpayers.
Incent|ves to contro| r|sk
tak|ng
1he presence of federal
guaranLees would creaLe an
lncenLlve for excesslve rlsk
Laklng. LlmlLlng governmenL
guaranLees and charglng
rlsk-based prlces for Lhem
would reduce LhaL
lncenLlve. ln addlLlon,
prlvaLe lnLermedlarles
would have an lncenLlve Lo
seL rlsk-based prlces and
monlLor rlsk Laklng.
Pavlng Lhe governmenL
absorb all credlL losses
would creaLe a sLrong
lncenLlve for excesslve rlsk
Laklng by orlglnaLors. 1he
governmenL could counLer
LhaL lncenLlve by seLLlng
rlsk-based prlces for
guaranLees and by
resLrlcLlng ellglblllLy for
guaranLees Lo safer
morLgages. lncenLlves Lo
llmlL rlsk Laklng would
probably be weaker Lhan lf
prlvaLe caplLal was ln Lhe
poslLlon Lo absorb some
losses.


llnanclal lnLermedlarles
would have a relaLlvely
sLrong lncenLlve Lo manage
rlsk, buL lL would be
weakened lf Lhelr
obllgaLlons were seen as
lmpllclLly guaranLeed by Lhe
governmenL.

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nybr|d ub||c]r|vate
Mode|
Iu||y Iedera| Agency Iu||y r|vate Market
Cther cons|derat|ons uependlng on Lhe model
lmplemenLed, governmenL
conLrol over Lhe secondary
morLgage markeL could be
greaLer or less Lhan under
Lhe precrlsls model.
1enslons beLween publlc
and prlvaLe purposes mlghL
remaln, parLlcularly under
models wlLh a small
number of hlghly regulaLed
lnLermedlarles.
Subsldles could LllL Lhe
allocaLlon of caplLal ln Lhe
economy Loo far Loward
houslng and away from
oLher uses.
1he governmenL would
conLrol a large segmenL of
Lhe caplLal markeL.
1he markeL would probably
be less dynamlc, and Lhere
would be less lncenLlve for
produce lnnovaLlon.
1enslons beLween publlc
and prlvaLe purposes would
be mlnlmlzed.
Subsldles could LllL Lhe
allocaLlon of caplLal ln Lhe
economy Loo far Loward
houslng and away from
oLher uses.
1he governmenL would
regulaLe Lhe secondary
morLgage markeL buL
oLherwlse noL lnLervene.
1he markeL would noL rely
on Lhe vlablllLy of any one
flrm or buslness model.
1enslons beLween publlc
and prlvaLe purposes would
be mlnlmlzed.
5ootce. cooqtessloool 8oJqet Offlce (2010)

1he Congresslonal 8udgeL Cfflce (2010) dlscusses many lmporLanL and lnLeresLlng aspecLs, among Lhem
affordable houslng whlch ls of speclal lnLeresL Lo us. Concerns are wheLher Lo conLlnue relylng on
LargeLs seL for flrms by regulaLors, as under Lhe pre-crlsls model, or wheLher Lo Lransfer responslblllLy Lo
fully federal enLlLles, such as Lhe lPA. A relaLed lssue ls wheLher supporL for affordable houslng would
be pald for Lhrough general revenues, fees charged Lo lnsLlLuLlons securlLlzlng federally guaranLeed
morLgages, or mandaLes on Lhose lnsLlLuLlons Lo force Lhem Lo cross-subsldlze morLgage guaranLees"
(Congresslonal 8udgeL Cfflce, 2010, p. 33).

ln lebruary 2011, 1he ueparLmenL of Lhe 1reasury and Lhe u.S. ueparLmenL of Pouslng and urban
uevelopmenL (2011) ouLllned Lhree opLlons for Lhe fuLure sLrucLure of Lhe CSLs and Lhe lederal Pouslng
AdmlnlsLraLlon. As ouLllned ln Lhelr documenL, Lhe Lhree opLlons are as follows:
CpLlon 1 proposes a prlvaLlzed sysLem of houslng flnance, wlLh governmenL lnsurance role
llmlLed Lo lPA, uSuA, and ueparLmenL of veLerans' Affalrs' asslsLance for narrowly LargeLed
groups of borrowers. 1hls opLlon would dramaLlcally reduce Lhe governmenL's role ln lnsurlng
or guaranLeelng morLgages, llmlLlng lL Lo lPA and oLher programs LargeLed Lo credlL-worLhy
lower- and moderaLe-lncome borrowers. Whlle Lhe governmenL would conLlnue Lo provlde
access for Lhls LargeLed segmenL of borrowers, lL would leave Lhe vasL ma[orlLy of Lhe morLgage
markeL Lo Lhe prlvaLe secLor" (p. 27).
CpLlon 2 proposes a prlvaLlzed sysLem of houslng flnance, wlLh asslsLance from lPA, uSuA, and
ueparLmenL of veLerans' Affalrs for narrowly LargeLed groups of borrowers and a guaranLee
mechanlsm Lo scale up durlng Llmes of crlsls. As ln Lhe opLlon above, lPA and oLher narrowly
LargeLed programs would provlde access Lo morLgage credlL for low- and moderaLe-lncome
borrowers, buL Lhe governmenL's overall role ln Lhe houslng flnance sysLem would be
dramaLlcally reduced. ln Lhls opLlon, however, Lhe governmenL would also develop a backsLop
mechanlsm Lo ensure access Lo credlL durlng a houslng crlsls" (p. 28).
CpLlon 3 proposes a prlvaLlzed sysLem of houslng flnance, wlLh lPA, uSuA, and ueparLmenL of
veLerans' Affalrs provldlng asslsLance Lo low- and moderaLe-lncome borrowers and caLasLrophlc
relnsurance behlnd slgnlflcanL prlvaLe caplLal. under Lhls opLlon, a group of prlvaLe morLgage
guaranLor companles would guaranLee securlLles backs by morLgages for whlch Lhe governmenL
would provlde relnsurance Lo Lhe holders Lo Lhose securlLles, whlch would be pald ouL only lf
shareholders of Lhe prlvaLe morLgage guaranLors have been enLlrely wlped ouL" (p. 29).


Notloool commoolty kelovestmeot coolltloo - bttp.//www.octc.otq - 202-628-8866 31

SubsequenLly, ln lebruary 2012, Lhe lederal Pouslng llnance Agency (lPlA) submlLLed a sLraLeglc plan
for Lhe nexL phase of Lhe conservaLorshlps of lannle Mae and lreddle Mac (ueMarco, 2012). 1hey
[usLlfy golng forward wlLh Lhe followlng argumenLs:
1he LnLerprlses' losses are of such magnlLude LhaL Lhe companles cannoL repay Laxpayers ln
any foreseeable scenarlo,
CperaLlonal lnfrasLrucLures aL each company are worklng buL requlre subsLanLlal lnvesLmenL Lo
supporL fuLure buslness. 1he quesLlon ls wheLher Lo lmprove Lhe currenL lnfrasLrucLure or Lo
conslder Lhls an opporLunlLy Lo bulld someLhlng new,
ln Lhe absence of oLher comparable markeL lnfrasLrucLure, mlnlmlzlng fuLure Laxpayer losses
and ensurlng markeL llquldlLy and sLablllLy requlres preservlng Lhe LnLerprlses as worklng
companles [.],
AlLhough Lhe houslng flnance sysLem cannoL be called healLhy, lL ls sLable and funcLlonlng, albelL
wlLh subsLanLlal ongolng governmenL supporL,
Congress and Lhe AdmlnlsLraLlon have noL reached consensus on how Lo resolve Lhe
conservaLorshlps and deflne a paLh for houslng flnance. LeglslaLlve proposals have begun Lo
emerge, buL enacLmenL soon appears unllkely." (ueMarco, 2012, p. 9-10)

lannle Mae and lreddle Mac guaranLee abouL $100 bllllon per monLh ln new morLgage producLlon,
ranglng from abouL 73 percenL of morLgages (Congresslonal 8udgeL Cfflce, 2010, ue Marco, 2012), over
82 percenL of morLgages for homes wlLh up Lo four unlLs orlglnaLed (MlllsLeln, 2012), as lllusLraLed ln
llgures 1 and 2 below, Lo some 90 percenL of all home morLgage loans" (MorLgage llnance Worklng
Croup, 2011, p. 2, Congresslonal 8udgeL Cfflce, 2010).

I|gure 1: Abso|ute Amount and roport|ons of U.S. kes|dent|a| Mortgage Cr|g|nat|ons, 1990 to 2010

5ootce. Mlllstelo (2012)




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I|gure 2: roport|on of kes|dent|a| Mortgage Cr|g|nat|ons Secur|t|zed, 2001 to 2011
5ootce. Mlllstelo (2012)
Cver Lhe pasL few years, commerclal banks have reLrenched from houslng flnance, as shown ln llgures 3
and 4 below (see also MorLgage llnance Worklng Croup, 2011).

I|gure 3: Annua| ercentage Change of kea| Lstate Loans ne|d by Commerc|a| 8anks, 2008 to 2011

5ootce. Mlllstelo (2012)

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I|gure 4: Amount of r|vate-Labe| Mortgage 8acked Secur|t|es Issued, 2000 to 2010
5ootce. Mlllstelo (2012)

?eL, no prlvaLe secLor lnfrasLrucLure exlsLs Loday LhaL ls capable of securlLlzlng Lhe $100 bllllon per
monLh ln new morLgages belng orlglnaLed. Slmply shuLLlng down Lhe LnLerprlses would drlve up lnLeresL
raLes and llmlL morLgage avallablllLy" (ueMarco, 2012, p. 2) as unllke Lhe banklng lndusLry, Lhere are
noL Lhousands of poLenLlal flrms ready Lo sLep lnLo Lhe buslness of morLgage securlLlzaLlon. lndeed,
ouLslde of Lhe securlLlzaLlon avallable Lhrough Lhe CovernmenL naLlonal MorLgage AssoclaLlon (Clnnle
Mae) for loans prlmarlly backed by lPA, Lhere ls llLLle else ln place Loday Lo assume Lhe secondary
markeL funcLlons served by Lhe LnLerprlses" (ueMarco, 2012, p. 9).

ueMarco (2012) ldenLlfled Lhree sLraLeglc goals for Lhe nexL phase of Lhe conservaLorshlps:
8ulld. 8ulld a new lnfrasLrucLure for Lhe secondary morLgage markeL.
ConLracL. Cradually conLracL Lhe LnLerprlses' domlnanL presence ln Lhe markeLplace whlle
slmpllfylng and shrlnklng Lhelr operaLlons, and
MalnLaln. MalnLaln foreclosure prevenLlon acLlvlLles and credlL avallablllLy for new and
reflnanced morLgages" (ueMarco, 2012, p. 2).

Cver Lhe pasL several years, numerous proposals abouL Lhe fuLure of Lhe CSLs have been dlscussed (see
Carr eL al., 2011, lmmergluck, 2011, and MorLgage llnance Worklng Croup, 2009, among many oLhers).
1he cenLral quesLlon has remalned wheLher a governmenL guaranLee ls essenLlal Lo a funcLlonlng
morLgage markeL, especlally for low-lncome borrowers and borrowers of color. unLll recenLly, Lhe CSLs
had a borrowlng advanLage as Lhey were allowed Lo lssue debL securlLles aL lnLeresL raLes almosL as low
as 1reasury securlLles. 1hen, gradual prlce lncreases based on rlsk and Lhe cosL of caplLal were
announced. 1he 1emporary ayroll 1ax CuL ConLlnuaLlon AcL of 2011 requlred Lhe lPlA Lo lncrease
guaranLee fees by aL leasL an average of 10 basls polnLs and furLher dlrecLed LhaL lPlA conslder Lhe cosL
of prlvaLe caplLal and Lhe rlsk of loss ln seLLlng guaranLee fees" (ueMarco, 2012, p. 13). 1hese
developmenLs wlll mosL llkely lmpacL flrsL-Llme homeownershlp, especlally by borrowers of color. noL
many proposals focus on Lhls lssue, however.

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1he MorLgage 8ankers AssoclaLlon (2009b, see also 2009a) compares and conLrasLs Lhe currenL sLaLe of
Lhe CSLs and Lhe secondary morLgage markeL wlLh Lhe poLenLlal role of Lhe federal governmenL ln Lhe
core secondary morLgage markeL, as lllusLraLed ln llgures 3 and 6 below.

I|gure S: n|gh-Leve| V|ew of the Current State: Iann|e Mae, Iredd|e Mac, and the Secondary Mortgage Market

5ootce. Mottqoqe 8ookets Assoclotloo (2009b)
I|gure 6: n|gh-Leve| V|ew of the 1arget State: otent|a| ko|e of the Iedera| Government |n the Care Secondary
Mortgage Market
5ootce. Mottqoqe 8ookets Assoclotloo (2009b)


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1he Lwo maln elemenLs of Lhe M8A proposal are Lhe morLgage credlL-guaranLor enLlLles (MCCL) and
wrap" (CC) securlLles guaranLeed by Lhe federal governmenL. 1he M8A suggesLs LhaL Lhe MCCLs
should be prlvaLely owned, mono-llne lnsLlLuLlons focused solely on Lhe morLgage credlL guaranLee and
securlLlzaLlon buslness. [.] 1he number of MCCLs should be based on Lhe goals of a) compeLlLlon, b)
sLrong and effecLlve regulaLory overslghL, c) efflclency and scale, d) sLandardlzaLlon, e) securlLy volume
and llquldlLy, f) ensurlng no one MCCL becomes 'Loo blg Lo fall' and g) Lhe LranslLlon from Lhe currenL
governmenL sponsored enLlLy (CSL) framework. lnlLlally, Lhe number of MCCLs should be elLher Lwo or
Lhree. 1he regulaLor would have Lhe ablllLy Lo lncrease LhaL number over Llme, Lhrough Lhe granLlng of
charLers, as Lhe markeL develops" (MorLgage 8ankers AssoclaLlon, 2009, p. 6). 1he M8A (2009) suggesLs
LhaL Lhe CC would be responslble for Lhe sLandardlzaLlon of morLgage producLs, lndenLures, and
morLgage documenLaLlon for Lhe core morLgage markeL. 1he CC ls noL lnLended Lo supporL Lhe enLlre
morLgage markeL, buL raLher only Lhose producLs needed Lo keep Lhe secondary markeL for core
morLgage producLs llquld and funcLlonlng Lhrough all envlronmenL. 1here would conLlnue Lo be key
roles for lPA, vA, 8PS and Clnnle Mae as well as for Lhe fully prlvaLe markeL, parLlcularly as such roles
evolve ln supporL of publlc or soclal houslng pollcy goals and ob[ecLlves. lPA, vA, 8PS and Clnnle Mae
would conLlnue Lo play crlLlcal roles ln provldlng governmenL credlL supporL for affordable houslng,
whlle Lhe fully prlvaLe markeL would provlde flnance vehlcles for morLgages LhaL fall ouLslde of core
producL proflles" (MorLgage 8ankers AssoclaLlon, 2009, p. 8). 1he M8A polnLs ouL rlsk-based prlclng ln
connecLlon wlLh Lhe MCCLs. 1hls means LhaL Lhose borrowers who do noL wlsh Lo go Lhrough Lhe lPA,
Lhe vA, Lhe 8PS, and Clnnle Mae mlghL be prlced ouL of Lhe prlmary markeL. 1hls mlghL especlally affecL
borrowers of color and communlLles of color, as shown ln Lhe dlscusslon abouL Lhe Cuallfled 8esldenLlal
MorLgage (C8M), shown ln Carr eL al. (2011).

1he naLlonal AssoclaLlon of Pome 8ullders (nAP8) suggesLs LranslLlonlng lannle Mae and lreddle Mac,
ln an orderly fashlon over Llme, Lo a new securlLlzaLlon sysLem for convenLlonal morLgages backed by
prlvaLe caplLal and a prlvaLely funded federal morLgage-backed securlLles lnsurance fund" (naLlonal
AssoclaLlon of Pome 8ullders, 2012, p. 1). 1hey also suggesL havlng a federal backsLop Lo provlde
lnvesLors assurance LhaL Lhelr prlnclpal and lnLeresL wlll be dellvered as promlsed, buL Lhls supporL
should be llmlLed Lo caLasLrophlc slLuaLlons where carefully callbraLed levels of prlvaLe caplLal and
lnsurance reserves are depleLed before any Laxpayer funds are employed Lo shore up Lhe markeL. 1hls
would be done by creaLlng a prlvaLely funded lnsurance pool for convenLlonal morLgage-backed
securlLles (M8S) LhaL would be slmllar Lo lnsurance fund LhaL secures savlngs deposlLs Lhrough Lhe
lederal ueposlL lnsurance CorporaLlon (lulC)" naLlonal AssoclaLlon of Pome 8ullders, 2012, p. 1).

More speclflcally, Pouslng llnance LnLlLles (PlLs) would be charLered Lo purchase morLgages from loan
orlglnaLors and Lo bundle Lhe loans lnLo securlLles. 1he PlLs could be housed lnslde Lhe lnfrasLrucLure of
Lhe Lwelve lederal Pome Loan 8anks (lPL 8anks) or could be creaLed ouL of Lhe lnfrasLrucLure lefL
behlnd by lannle Mae and lreddle Mac. 1he nAP8 suggesLs LhaL Lhe securlLlzaLlon sysLem should
operaLe under Lhe overslghL of a sLrong lndependenL regulaLory agency Lo ensure all aspecLs of safeLy
and soundness and LhaL Lhe agency should be governed by a board slmllar Lo Lhe body governlng Lhe
lulC. Whlle Lhe nAP8 proposal ls well LhoughL ouL and falrly deLalled, lL does noL address affordable
homeownershlp, lncludlng homeownershlp by people of color.


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MlllsLeln (2012) argues LhaL any responslble LranslLlon by Lhe governmenL from Lhe sLaLus quo musL
meeL flve ob[ecLlves:
1. roLecL Lhe economy
A rapld wlLhdrawal of governmenL supporL for morLgage credlL wlll drlve down house prlces
and desLablllze Lhe broader flnanclal sysLem,
2. lulflll Lhe governmenL's promlse Lo holders of lannle and lreddle M8S and debL securlLles
1hese are Lhe same lnvesLors LhaL fund 1reasury debL,
We cannoL afford Lo undermlne Lhe credlblllLy of Lhe full falLh and credlL of Lhe unlLed
SLaLes, glven our mounLlng debL burden and conLlnulng borrowlng needs,
3. rovlde an expllclL, approprlaLely-prlced governmenL backsLop for quallfled morLgage producLs,
noL enLlLles
1he governmenL should regulaLe flnanclal enLlLles lnvolved ln morLgage flnance, noL
underwrlLe Lhelr balance sheeL rlsks,
4. Lnsure adequaLe prlvaLe caplLal
rlvaLe morLgage lnsurers and securlLlzers musL be adequaLely caplLallzed Lo absorb all
losses ln mosL downLurns, proLecL Lhe governmenL agalnsL losses on lLs backsLop, and avold
Lhe need for fuLure governmenL ballouLs,
3. CeL Lhe Laxpayer's money back
1axpayers should be repald for supporLlng Lhe houslng markeL Lo daLe and durlng Lhe
LranslLlon Lo a new sysLem." (MlllsLeln, 2012, p. 9)

8ased on Lhese flve ob[ecLlves, MlllsLeln (2012) suggesLs esLabllshlng a lederal MorLgage lnsurance
CorporaLlon (lMlC), whlch could be born ouL of Lhe exlsLlng lederal Pouslng llnance Agency and whlch
would ensure sLable credlL for Lhe houslng sysLem and proLecL Laxpayers agalnsL loss by (a) esLabllshlng
sLandards for quallfylng morLgage producLs and pracLlces, (b) relnsurlng morLgage-backed securlLles
(M8S) comprlsed of morLgages LhaL meeL sLrlngenL underwrlLlng and dlsclosure crlLerla, and (c)
supervlslng parLlclpaLlng M8S securlLlzers and new prlvaLe M8S lnsurers for safeLy, soundness, and
caplLal adequacy. 1he lMlC would be lndependenL buL musL be lnsulaLed agalnsL pollLlcal lnLerference,
slmllar Lo Lhe lederal ueposlL lnsurance CorporaLlon (lulC). SecurlLlzers and prlvaLe M8S lnsurers are
flrsL ln llne Lo cover losses on a conformlng M8S pool.

1he lMlC would charge a fee Lo guaranLee lncremenLal shorLfalls ln paymenLs on Lhe M8S pool and
force Lhe securlLlzer and/or Lhe M8S lnsurer Lo hold sufflclenL caplLal Lo cover losses up Lo Lhe polnL aL
whlch Lhe lMlC's relnsurance aLLaches. 1he relnsurance fee would be deLermlned by reference Lo
prlvaLe markeLs and ad[usLed Lo a smooLh LranslLlon Lo Lhe new sysLem. lL would address sLresses ln Lhe
flnanclal markeLs and recoup losses over Llme, llke oLher successful publlc lnsurance programs. Slmllar
Lo Lhe lulC ueposlL lnsurance lund, fees collecLed by Lhe lMlC would be placed ln a reserve fund LhaL
bullds over Llme and could be used Lo offseL losses from any perlods ln whlch Lhe relnsurance was
underprlced (MlllsLeln, 2012). Whlle MlllsLeln's proposal ls very sophlsLlcaLed, lL does noL answer Lhe
quesLlon whaL would happen Lo homeownershlp by people of color.




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unllke oLher proposals dlscussed above, Lhe MorLgage llnance Worklng Croup (2011, see also WarLell,
2011) focuses noL only on revamplng Lhe morLgage markeL buL on mlddle-class and underserved
borrowers ln parLlcular. 1he auLhors of LhaL sLudy Lhlnk LhaL Lhe new morLgage flnance sysLem should be
gulded by flve overarchlng prlnclples:
LlquldlLy: provlde parLlclpanLs ln Lhe caplLal markeLs wlLh Lhe confldence Lo dellver a
rellable supply of caplLal Lo ensure access Lo morLgage credlL, every day and ln every
communlLy, Lhrough large and small lenders allke,
SLablllLy: reln ln excesslve rlsk Laklng and promoLe reasonable producLs backed by sufflclenL
caplLal Lo proLecL our economy from desLrucLlve boom-busL cycles such as Lhe one we are
now sLruggllng Lo overcome, and Lhe ones LhaL used Lo plague our economy before Lhe
reforms of Lhe 1930,
1ransparency and sLandardlzaLlon: requlre underwrlLlng, documenLaLlon, and analyLlcal
sLandards LhaL are clear and conslsLenL across Lhe board so consumers, lnvesLors, and
regulaLors can accuraLely assess and prlce rlsk, and regulaLors can hold lnsLlLuLlons
accounLable for malnLalnlng an approprlaLe level of caplLal,
AffordablllLy: ensure access Lo reasonably prlced flnanclng for boLh homeownershlp and
renLal houslng,
Consumer proLecLlon: ensure LhaL Lhe sysLem supporL Lhe long-Lerm besL lnLeresL of all
borrowers and consumers and proLecLs agalnsL predaLory pracLlces." (MorLgage llnance
Worklng Croup, 2011, p. 2-3)

lnLeresLlngly, Lhe auLhors of LhaL sLudy dlvlde Lhe homeownershlp and renLal houslng markeLs lnLo Lhree
parLs: flrsL, underserved borrowers or LenanLs, whose houslng needs (wheLher as homeowners or
renLers) may requlre some dlrecL governmenL supporL, second, mlddle-class borrowers or LenanLs,
whose houslng needs requlre secondary markeL llquldlLy and long-Lerm flnance Lhough a llmlLed
governmenL backsLop of Lhe morLgage flnance markeLplace, and Lhlrd, hlgher lncome and wealLhy
borrowers and LenanLs, whose houslng needs requlre governmenL flnanclal lnLervenLlon ln case
morLgage markeLs freeze.

1he MorLgage llnance Worklng Croup (2011) proposes a new sysLem LhaL preserves Lhe LradlLlonal roles
of morLgage orlglnaLors buL moves some of Lhe funcLlons prevlously provlded by lannle Mae Lo Lhree
new acLors: lssuers, CharLered MorLgage lnsLlLuLlons (CMls), and a CaLasLrophlc 8lsk lnsurance lund. An
overvlew of Lhe new suggesLed sysLem ls provlded ln llgure 7 below.












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I|gure 7: Compar|son of r|mary Iunct|ona| kespons|b|||t|es |n Government-8acked Secur|t|zat|on

5ootce. Mottqoqe lloooce wotkloq Ctoop (2011)

lssuers, prlvaLe enLlLles lnsLead of lannle Mae and lreddle Mac, would be buylng loans for securlLlzaLlon
and lssulng morLgage-backed securlLles. lssuers would purchase credlL lnsurance from Lhe new
CharLered MorLgage lnsLlLuLlons for Lhose M8Ss and Lhe loans backlng Lhem lf Lhey meeL cerLaln
sLandards. CharLered MorLgage lnsLlLuLlons, also prlvaLe, would be regulaLed by a federal agency and
would be prlvaLe lnvesLors of morLgage-backed securlLles, whlch would resulL ln a guaranLee of Llmely
paymenL of prlnclpal and lnLeresL on Lhe securlLles, Lyplcally lssued by oLhers, backed by loans ellglble
for governmenL supporL Lhrough Lhe CaLasLrophlc 8lsk lnsurance lund" (MorLgage llnance Worklng
Croup, 2011, p. 6). 1he CaLasLrophlc 8lsk lnsurance lund would be a governmenL-run fund, funded by
premlums on Lhe morLgage-backed securlLles guaranLeed by Lhe CharLered MorLgage lnsLlLuLlons. 1he
fund would be expllclL and llmlLed, buL lL would be able Lo sLep ln ln case of flnanclal fallure of Lhe
CharLered MorLgage lnsLlLuLlons, conLlnulng Lhe Llmely paymenL of prlnclpal and lnLeresL Lo lnvesLors.
1hls fund would be slmllar Lo Lhe currenL lederal ueposlL lnsurance CorporaLlon's ueposlL lnsurance
lund.


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1he MorLgage llnance Worklng Croup (2011) esLlmaLes LhaL Lhe cosL of a 30-year flxed raLe morLgage
would probably lncrease by abouL 30 basls polnLs, or 0.3 percenL. 1hey acknowledge LhaL Lhere wlll sLlll
be underserved borrowers, LenanLs, and communlLles. 1hus, some governmenL supporL wlll be needed,
for example Lhough Lhe lederal Pouslng AdmlnlsLraLlon. 1he suggesLed CharLered MorLgage lnsLlLuLlons
would have an obllgaLlon Lo provlde an equlLable ouLleL for oll prlmary markeL morLgages, noL [usL
llmlLed classes of loans, meeLlng Lhe sLandards for Lhe guaranLee of well-deslgned, susLalnable loans,
raLher Lhan servlng only a llmlLed segmenL of Lhe buslness such as hlgher-lncome porLlons of Lhe
markeL" (MorLgage llnance Worklng Croup, 2011, p. 7).

CCNCLUSICN

8ecenLly, some have quesLloned wheLher homeownershlp should be a deslrable publlc pollcy goal
(uavls, 2012). lor example, llorlda (2009 and 2010) argues LhaL u.S. governmenL pollcles should
encourage renLlng, noL buylng, and suggesLs LhaL u.S. houslng pollcy has creaLed a workforce Loo ofLen
sLuck ln place, anchored by houses LhaL cannoL be proflLably sold, aL a Llme when flexlblllLy and moblllLy
are of greaL lmporLance" (llorlda, 2009, p. 13). Powever, desplLe some quesLlonlng homeownershlp,
evldence (dlscussed below) shows LhaL lL remalns an lmporLanL prlorlLy for many Amerlcans.

ln mld-May 2012 1he 1arrance Croup (2012, see also !olnL CenLer for Pouslng SLudles of Parvard
unlverslLy, 2012) surveyed 1,000 reglsLered llkely" voLers abouL Lhelr aLLlLudes, among Lhem aLLlLudes
abouL homeownershlp. Among oLher quesLlons, Lhey asked how lmporLanL homeownershlp ls for Lhe
respondenL personally, uslng a scale from zero Lo Len, where zero means noL aL all lmporLanL" and Len
means exLremely lmporLanL." 1he mean score was 8.6, for 62 percenL, homeownershlp was exLremely
lmporLanL, for 24 percenL lL was very lmporLanL, for elghL percenL lL was somewhaL lmporLanL, and for
slx percenL lL was noL lmporLanL aL all. ln a follow-up quesLlon, Lhe survey admlnlsLraLors asked abouL
wheLher homeownershlp ls (a) more lmporLanL, (b) [usL as lmporLanL, or (c) less lmporLanL Lhan lL was
flve years ago. 1hlrLy-Lhree percenL sLaLed LhaL homeownershlp was more lmporLanL, flfLy-one percenL
answered LhaL lL was [usL as lmporLanL, and 12 percenL LhaL lL was less lmporLanL Lo Lhem (whlle four
percenL were unsure). ln anoLher follow-up quesLlon wlLh mulLlple answers Lhe researchers asked Lhose
830 respondenLs who answered more lmporLanL" or [usL as lmporLanL" Lo Lhe prevlous quesLlon abouL
Lhe slngle mosL lmporLanL reason why homeownershlp ls mosL lmporLanL" or [usL as lmporLanL." ln
sum, 43 percenL sLaLed flnanclal reasons whlle 44 percenL sLaLed personal reasons. WlLh regard Lo Lhe
former, 19 percenL sLaLed LhaL homeownershlp ls a beLLer flnanclal cholce Lhan renLlng, 12 percenL
polnLed ouL Lhe lnvesLmenL or resale value, 10 percenL sLaLed ownershlp, and four percenL menLloned
Lhe Lax break for morLgage lnLeresL. WlLh regard Lo Lhe laLLer, 19 percenL sLaLed LhaL homeownershlp ls
a beLLer opLlon for Lhe famlly, 17 percenL sLaLed securlLy and safeLy, elghL percenL polnLed ouL prlvacy,
and 12 percenL polnLed ouL oLher reasons.

Whlle ln Lhe currenL day and age Lhe shelLer funcLlon mlghL have galned ln lmporLance over Lhe wealLh
bulldlng funcLlon, we belleve LhaL Lhe wealLh bulldlng funcLlon mlghL galn ln lmporLance agaln ln Lhe
near and dlsLanL fuLure. WealLh bulldlng has been dlfflculL ln Lhe recenL pasL: lnLeresL raLes for savlngs
producLs are low and wlll conLlnue Lo be low, Lhe sLock markeL has remalned volaLlle and requlres
sophlsLlcaLed flnanclal knowledge, and a college degree does noL guaranLee susLalnable employmenL
glven Lhe economlc crlsls ln Lhe shorL run and Lhe economlc resLrucLurlng ln Lhe long run. ln 2003, rlghL

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aL Lhe peak of Lhe house prlce bubble, 8elsky and 8eLslnas (2003) sLaLed LhaL for mosL Amerlcans
homeownershlp consLlLuLes a wealLh-bulldlng sLraLegy. lor lower-lncome people, lL ls Lhe only real
wealLh-bulldlng sLraLegy" (8elsky and 8eLslnas, 2003, p. 9).

Cramer eL al. (2012, see also Cramer eL al., 2010) polnL ouL LhaL Lhe federal budgeL conLlnues Lo
allocaLe a large amounL of resources Lo pollcles LhaL help famllles accumulaLe resources and bulld
wealLh. MosL of Lhese, however, dlsproporLlonaLely beneflL hlgher-lncome earners. Mlsslng are
proposals LhaL would creaLe new ways Lo supporL Lhe upward moblllLy of Lhose sLarLlng on Lhe lower
rungs of Lhe laLLer" (Cramer eL al., 2012, p. 3). LxcepLlons ln Lhe realms of savlngs and lnvesLmenL,
reLlremenL securlLy, and homeownershlp are Lhe AsseLs for lndependence AcL, whlch provldes granLs Lo
communlLy-based non-proflLs and governmenL agencles Lo lmplemenL lndlvldual uevelopmenL AccounL
(luA) programs, Lhe volunLeer lncome 1ax AsslsLance (vl1A) program, Lhe proposed 8ank on uSA
lnlLlaLlve, whlch would help lncrease access Lo affordable and hlgh-quallLy flnanclal servlces for Lhe
unbanked and under-banked households by seedlng local lnlLlaLlves, Lhe AuLol8A proposal, Lhe PCML
lnvesLmenL arLnershlps, houslng counsellng asslsLance, Lhe lamlly Self-Sufflclency voucher rogram,
Lhe lederal Pouslng AdmlnlsLraLlon efforLs, anLl-foreclosure efforLs (e.g., Lhe Pome Affordable
ModlflcaLlon rogram PAM), and 8ural Pouslng Servlces.

Shlller (2012a and 2012b) dlscusses loLLery-llnked savlngs, crowd fundlng, beneflL corporaLlons, and
parLlclpaLlon nonproflL corporaLlons, all of whlch mlghL be lnLeresLlng poLenLlal wealLh bulldlng
alLernaLlves for some. neverLheless, we Lhlnk LhaL low- and mlddle-lncome people wlll conLlnue Lo
lnvesL ln homeownershlp. 1he foreclosure crlsls has broughL a flnanclal Lsunaml Lo many homeowners ln
our naLlon. Clven Lhe perslsLenL lmporLance of homeownershlp, more research should be underLaken
on Lhe wealLh sLrlpplng of homeowners and savers. lurLher research should also be conducLed on
successful sLraLegles for creaLlng susLalnable homeownershlp opporLunlLles for low- and moderaLe-
lncome populaLlons. 1here are many parLs of Lhe unlLed SLaLes where homeownershlp ls noL only
affordable buL also comparable Lo renLlng ln Lerms of monLhly cosLs (Anacker and Ll, n.d.). Pow many or
whaL segmenL of low- and moderaLe-lncome households do noL need subsldles buL [usL need access Lo
susLalnable loans? Pow many may need downpaymenL asslsLance and whaL are Lhe models for
downpaymenL asslsLance programs? 1hese areas and oLhers warranL furLher research.

Notloool commoolty kelovestmeot coolltloo - bttp.//www.octc.otq - 202-628-8866 41


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