Using a newly developed additive semiparametric model, this paper investigates how the implicitly-subsided affordable housing credit in the secondary mortgage market is distributed over lower income homebuyers. GSE and HMDA data for the 20 largest MSAs are used.
1 The partial-linear (PLR) semiparametric model does a better job, compared with linear and quadratic models, in controlling the non-linear effects of borrower’s credit risk factors. The PLR model significantly improves the goodness of fit and it reduce the estimation bias that is found in a linear model.
2 Detailed PLR analysis is conducted for each of the 20 metropolitan areas. The results suggest that neighborhoods with a higher ratio of African-Americans are more likely to be under-represented and a neighborhood’s racial component has a greater effect in suburban areas than that in center cities. It is also found that the GSEs purchase disproportionately numbers of lower income loans in relatively affluent neighborhoods. Higher frequency of investor loans and FHA/VA activities also contribute to the spatial mismatch.
3 The paper investigates the non-linearity of the effects of borrower’s risk factors on the GSE lower income purchases, using graphic presentations of the semiparametric results. It is the graphical representation of these non-linear components that provides a new and useful tool for analyzing mortgage risks.
1010 Affordable Housing Amazon Amenitization Architecture Artificial Intelligence Asia Australia automation Autonomous Vehicles bonds Borrowing Constraints Brexit California Canada Capital Business China Co-Working Environment coastal markets cold storage Colombia Commercial Brokerage Commercial Real Estate commissions Congestion consumer bias covid-19 CRE credit card market Credit Default Swaps Credit Insurance Credit Risk Transfers Culture Data Analytics data centers Data Collection Technology Debt Market Demand Demographics Density Development Discrete Choice disruption Diversity drones e-Commerce Economic Corridors economic policy economics education election studies Equity Funds Equity Market Ethnic Factors Europe Fannie Mae financial asset management Foreclosures Foreign Policy France Freddie Mac general equilibrium Global global economy Global Financial Crisis Globalization great depression Great Recession healthy buildings Hedonic hospitality Housing & Residential housing boom Housing Disease housing prices Housing Supply Identity Income Inequality India inflation Inter-generational mobility interest rates Investing jobs labor market Lagging Regions land use regulation Language life sciences Macroeconomics malls Market Pricing megacities Microeconomics Migration Minimum Payments Mixed-Use Mobility moral hazard mortgage insurance mortgage market Mortgage Rates Mortgages Multi-family Nation Building Non-Traditional Mortgages Office Market office sector pension funds Placed Based Policies Political Risk Price Discovery Private Equity Business public health public policy Public Schools real estate brokerage Real Estate Investment Real Estate Investment Trusts Recession Rental Retail Retirement reverse mortgages Risk Adjustment risk management risk-shifting robotics single family housing Slums Sorting South America Spatial Regions spillover effect stimulus package Sub-Prime Mortgages Sustainability Technology telecommunications trade transportation unemployment United States Urban Urbanization Warehouse welfare work from home