Mortgage Supply and the US Housing Boom: The Role of the Community Reinvestment Act
Zusammenfassung
This paper studies the role of the Community Reinvestment Act (CRA) in the US housing boom-bust cycle. I find that the enhancement in CRA enforcement in 1998 increased the growth rate of mortgage lending by CRA-regulated banks to CRA-eligible census tracts. I show that during the boom period house price growth was higher in the eligible census tracts because of the shift in mortgage supply of regulated banks. Consequently, these census tracts experienced a worse housing bust. I find that CRA-induced mortgages went to borrowers with lower FICO scores and encountered more frequent delinquencies.
Forschungsbereich
Financial Institutions
Schlagworte
the community reinvestment act, mortgage supply, house prices, homeownership
JEL-Klassifizierung
G28, G21, R21, R31
Thema
Household Finance
Monetary Policy
Stability and Regulation
Monetary Policy
Stability and Regulation
Beziehungen
1
Publikationstyp
Working Paper
Link zur Publikation
Collections
- LIF-SAFE Working Papers [334]