Stephen L. Ross
Yuan Wang

We use HMDA rate spread loans to identify lenders involved in riskier lending prior to the foreclosure crisis. We develop a shift-share measure of changes in high rate spread share lender representation in housing submarkets across origination years. While half the cross-sectional correlation between foreclosure and high rate spread lender share is explained by borrower observables, we find robust and stable estimates of the within housing submarket relationship between foreclosure and predicted changes in market share. Estimates are not explained by local housing price variation, rather evidence suggests servicer behavior in response to rising local foreclosure rates as a mechanism.  

Publication Type
Working Paper
File Description
Firsts version, January 2022
JEL Codes
D14: Personal Finance
G01: Financial Crises
G21: Banks; Depository Institutions; Micro Finance Institutions; Mortgages
R21: Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
R23: Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
rate spread loans
subprime lending
local housing markets
home purchase mortgages
house price declines
loan servicers