From the Subprime to the Exotic: Excessive Mortgage Market Risk and Foreclosures

Figures & data

Figure 1. Percentage of U.S. home purchase loans that are government-guaranteed and subprime and percentage of U.S. home refinances by subprime lenders, 1993–2003: Source: HMDA data compiled by Scheessele (1999) for 1993 to 1996, and by author using Federal Financial Institutions Examination Council (2007) data for 1997–2004.

Figure 2. Increase in the subprime share of home purchase loans 1997–2003 versus median 1997 loan amounts, for 103 large U.S. metropolitan areas: Source: Author's calculations using HMDA data from Federal Financial Institutions Examination Council (2007).

Table 1. Results of model predicting share of 2003 home purchase loans made by subprime lenders in U.S. metropolitan areas with populations over 500,000 in 2000.

	Mean	Std. dev.	B	Std. error	Beta	Signif.
Constant			1.107	0.270		0.000
Proportion of purchase loans made by subprime lenders, 1997	0.111	0.058	0.594	0.353	0.198	0.096
Median home purchase loan size, 1997	0.033	0.019	−8.320× 10^−7	5.449 × 10^−7	−0.457	0.130
Proportion buyers who were Black, 1997	0.060	0.046	0.164	0.253	0.132	0.518
Proportion buyers who were Hispanic, 1997	0.068	0.113	0.086	0.057	0.168	0.135
Proportion residents with college degree or more, 2000	0.262	0.060	−0.315	0.134	−0.327	0.021
Proportion of housing units built before 1950, 2000	0.207	0.127	0.042	0.046	0.093	0.356
Ratio of median loan size to FHA limit, 1997	0.381	0.067	0.057	0.120	0.067	0.635
Ratio of median buyer income to median loan size, 1997	0.536	0.078	−3.186	0.844	−4.291	0.000
Ratio of median buyer income to median loan size, 1997, squared	0.293	0.086	2.463	0.693	3.671	0.001
1997 unemployment rate	0.051	0.023	0.178	0.520	0.071	0.732
Change in unemployment rate, 1997–2003 0.015	0.018	0.458	0.445	0.140	0.307
Instrumented variables
Ratio of median purchase loan size, 1997–2003	0.448	0.187	0.121	0.060	0.392	0.047
Change in proportion of buyers who were Black, 1997–2003	−0.005	0.015	0.809	1.701	0.212	0.636
Change in proportion of buyers who were Hispanic, 1997–2003	0.018	0.023	1.281	0.896	0.515	0.156
N = 103
R ^2 = .672
Notes: Instrumental variables include: (1) Percent change in Office of Federal Housing Enterprise Oversight home price index, 1997–2003 (for Ratio of median purchase loan size, 1997–2003); (2) Change in proportion of residents who were non-Hispanic Black, 1990–2000 (for Change in proportion of buyers who were Black, 1997–2003); and (3) Change in proportion of residents who were Hispanic, 1990–2000 (for Change in proportion of buyers who were Hispanic, 1997–2003).

Figure 3. Percentage of conventional jumbo and non-jumbo mortgages with adjustable rates, 1990–2004: Source: Federal Housing Finance Board (2006).

Figure 4. Proportion of conventional mortgages with adjustable rates versus average home purchase price, for 31 large U.S. metropolitan areas, 2004: Source: Federal Housing Finance Board (2006).

Figure 5. Foreclosure filing rates versus subprime lender shares of home purchase loans for 81 large U.S. metropolitan areas: Sources: Foreclosure filing rate calculated by the author using data from RealtyTrac, Inc. (2006) and HMDA data from Federal Financial Institutions Examination Council (2007). Share of home purchaseloans that were subprime calculated by the author using HMDA data from Federal Financial Institutions Examination Council (2007).

Table 2. Metropolitan areas with highest and lowest levels of growth in foreclosure filings ^a between the second half of 2006 and the first half of 2007.

Metropolitan areas with the highest rates of foreclosure growth	% change, second half 2006 to first half 2007	Metropolitan areas with the lowest rates of foreclosure growth	% change, second half 2006 to first half 2007
New Haven–Milford, CT	275	Baton Rouge, LA	−78
Washington, DC–Arlington–Alexandria, VA–MD	225	Buffalo–Cheektowaga–Tonawanda, NY	−36
Hartford, CT	168	Little Rock–North Little Rock, AR	−24
Sacramento, CA	162	Oklahoma City, OK	−22
Stockton, CA	116	Pittsburgh, PA	−21
Charlotte–Gastonia, NC	109	Louisville, KY	−20
Raleigh–Cary, NC	108	Camden, NJ	−17
Ventura, CA	103	San Antonio, TX	−15
Sarasota–Bradenton–Venice, FL	100	Salt Lake City, UT	−14
Cambridge–Newton–Framingham, MA	93	Houston–Baytown–Sugarland, TX	−14
Bakersfield, CA	85	Austin–Round Rock, TX	−12
Riverside–San Bernardino, CA	80	Dallas, TX	−9
Orange County, CA	73	Omaha, NE–Council Bluffs, IA	−9
Las Vegas–Paradise, NV	72	Tulsa, OK	−8
Worcester, MA	71	El Paso, TX	−8
Cincinnati, OH	68	Indianapolis, IN	−3
Essex, MA	67	Philadelphia, PA	1
Phoenix–Mesa, AZ	66	Newark, NJ	1
Fresno, CA	66	Fort Worth–Arlington, TX	7
Los Angeles–Long Beach, CA	65	Milwaukee–Waukesha–West Allis, WI	7

Figure 6. Change in the proportion of housing units with a mortgage that entered the foreclosure process 1994–1995 to 2001–2005: Source: Data from Midwest Foreclosures (2003).

Figure 7. Adjustable rate mortgage presence and overvaluation risk, large metro markets: Sources: PMI, Inc. (2006) and Federal Housing Finance Board (2006).

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