Did Affordable Housing Legislation Contribute to the Subprime Securities Boom?

Andra C. Ghent, Rubén Hernández-Murillo, Michael T. Owyang

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

We use a regression discontinuity approach and present new institutional evidence to investigate whether affordable housing policies influenced the market for securitized subprime mortgages. We use merged loan-level data on nonprime mortgages with individual- and neighborhood-level data for California and Florida. We find no evidence that lenders increased subprime originations or altered loan pricing around the discrete eligibility cutoffs for the Government-Sponsored Enterprises' (GSEs) affordable housing goals or the Community Reinvestment Act. Although we find evidence that the GSEs bought significant quantities of subprime securities, our results indicate that these purchases were not directly related to affordable housing mandates.

Original languageEnglish (US)
Pages (from-to)820-854
Number of pages35
JournalReal Estate Economics
Volume43
Issue number4
DOIs
StatePublished - Dec 1 2015
Externally publishedYes

Fingerprint

Subprime
Legislation
Affordable housing
Government sponsored enterprises
Loans
Mandate
Loan pricing
Purchase
Regression discontinuity
Housing policy
Mortgages
Subprime mortgages

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Did Affordable Housing Legislation Contribute to the Subprime Securities Boom? / Ghent, Andra C.; Hernández-Murillo, Rubén; Owyang, Michael T.

In: Real Estate Economics, Vol. 43, No. 4, 01.12.2015, p. 820-854.

Research output: Contribution to journalArticle

Ghent, Andra C. ; Hernández-Murillo, Rubén ; Owyang, Michael T. / Did Affordable Housing Legislation Contribute to the Subprime Securities Boom?. In: Real Estate Economics. 2015 ; Vol. 43, No. 4. pp. 820-854.
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