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Working Papers

Homeownership and the Use of Nontraditional and Subprime Mortgages

Working paper #792
Arthur Acolin, Raphael W. Bostic, Xudong An and Susan M. Wachter

This paper examines the association between nontraditional (NTM) and subprime mortgages and the change in the number of homeowners and the change in the homeownership rate at the county level between 2000 and 2012. We find no relationship between changes in the homeownership rate and NTM and subprime mortgage lending. We find significant relationships between changes in the number of homeowners (positive during the 2000-2006 period and negative during the 2006-2012 period) and NTM and subprime mortgage lending at the county level. For subgroups, including young, minority and low income households, we find either no relationship or smaller relationships than for the overall population for NTMs and for subprime lending. The overall relationship between NTMs and the change in the number of homeowners at the county level is stronger than the relationship for subprime mortgages during the boom and it is less negative during the bust.

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