Mortgage Lending in Homogenous Neighborhoods

A new study, available online, examines the racial contours of the U.S. subprime lending boom, foreclosure crisis, and recovery surrounding the Great Recession.

"Existing studies reveal general lending patterns in these periods but fail to scrutinize racially homogeneous neighborhoods where outcomes often diverge from aggregate trends," writes author Tyler Haupert, a graduate student at Columbia University, in the abstract to differentiate the study from previous research.

The study uses data from 2005 and 2015, and finds a commonality to the pre-recession market and the post-recession market: "the gap between white borrowers’ comparatively high application approval rates and minority borrowers’ lower approval rates grows as the proportion of white residents in a target neighborhood increases."

The big takeaway: the racially homogenous neighborhoods function differently than the aggregated experience of the housing market.

The study is available in its entirety online, published by the Housing Policy Debate journal.