Post by Sapphire Capital on Dec 17, 2008 22:03:08 GMT 4
Credit Impairment and Housing Tenure Choice
Paul S. Calem
LoanPerformance - Vice President of Product Research
Simon Firestone
Freddie Mac - Housing Analysis and Research
Susan M. Wachter
University of Pennsylvania - Finance Department
October 3, 2008
U of Penn, Inst for Law & Econ Research Paper No. 08-31
Abstract:
We analyze the relationship between underwriting standards and low-income homeownership rates using the 1979 National Longitudinal Survey of Youth. The survey respondents are a nationally representative sample of Americans mostly 40-48 years of age as of the most recent wave of the survey in 2004. Past research has identified credit impairment, wealth constraints, and income constraints as finance-related barriers to homeownership. Using a model of tenure choice, we find that absent all three constraints, the homeownership rate of low-income households in our sample would increase from 52.5 to 59.3 percent. Approximately half of this differential is attributable to households with impaired credit and those with 'thin-file status,' the lack of a substantial credit history.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1310203_code711466.pdf?abstractid=1310203&mirid=1
Paul S. Calem
LoanPerformance - Vice President of Product Research
Simon Firestone
Freddie Mac - Housing Analysis and Research
Susan M. Wachter
University of Pennsylvania - Finance Department
October 3, 2008
U of Penn, Inst for Law & Econ Research Paper No. 08-31
Abstract:
We analyze the relationship between underwriting standards and low-income homeownership rates using the 1979 National Longitudinal Survey of Youth. The survey respondents are a nationally representative sample of Americans mostly 40-48 years of age as of the most recent wave of the survey in 2004. Past research has identified credit impairment, wealth constraints, and income constraints as finance-related barriers to homeownership. Using a model of tenure choice, we find that absent all three constraints, the homeownership rate of low-income households in our sample would increase from 52.5 to 59.3 percent. Approximately half of this differential is attributable to households with impaired credit and those with 'thin-file status,' the lack of a substantial credit history.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1310203_code711466.pdf?abstractid=1310203&mirid=1