Rethinking Foreclosure Dynamics in a Sunbelt City: What Parcel-Level Mortgage Data Can Teach Us About Subprime Lending and Foreclosures

Abstract

The dynamics of mortgage foreclosures can be studied by examining parcel-level sales and mortgage data, alongside aggregate data reporting on defaults. This research relies on such microlevel analysis to explore three issues in high-foreclosure census tracts located in Hillsborough County, Florida. First, it notes the prevalence of investor-owners in high-foreclosure areas. Second, it considers the high percentage of adjustable rate mortgages identified in these areas and the frequency with which mortgage defaults occur before interest rate adjustments take effect. Third, it suggests that high levels of investor ownership and extreme volatility of housing and mortgage markets in these neighborhoods complicate the analysis of, and solutions to, the foreclosure crisis.

Keywords:

• foreclosure
• housing
• mortgages

Notes

^1. We began this research several years ago and selected our property samples based on 2000 census data. Since that time, 2010 census data have been released, but the tract boundaries in the Town-N-Country and New Tampa areas have changed significantly, so the properties we studied are now scattered across two or more tracts. We reviewed 2010 census data for those tracts, which allows us to refer, in general terms, to changes in each area, but we continue to use 2000 tract boundaries and data as our main source of information.

^2. A note on our terminology: In many states, owner-occupants are known as homesteaders, and properties with owner-occupants are called homesteaded properties. We use the terms owner-occupant and homesteader interchangeably. Some states provide tax benefits for homesteaders, so local and state property records make note of homesteaded properties. Those without homestead status may be second homeowners, may be owners of rental properties, or may be those holding on to properties with the sole intention of reselling them. We use the term investor as a shorthand for all these nonhomesteaders, even though our data do not, in fact, allow us to assess the motivations of those owning properties they do not live in.

^3. Even these data could have some inaccuracies. Homestead information is recorded in the fiscal year following a property sale; there is therefore a lag time between a property's shift into or out of homesteaded ownership and its recording in county records. These potential inaccuracies, however, would be minor.

^4. Our review of property records allowed us to see the address of current nonhomesteaded owners. We did not do a systematic analysis of owner addresses (many owners use post office boxes or addresses “in care of” other entities, so it would be hard to carry out such an analysis), but based on street addresses we could identify, it appears that few investors live in the Sulphur Springs neighborhood.