The Geography of Low and Moderate Income Home Purchase Lending

Authors: Daniel Hammel*, University of Toledo, Isabelle Nilsson, University of North Carolina Charlotte
Topics: Urban Geography
Keywords: Housing, Regional Economies, Rust Belt
Session Type: Paper
Day: 4/4/2019
Start / End Time: 8:00 AM / 9:40 AM
Room: Roosevelt 0, Marriott, Exhibition Level
Presentation File: No File Uploaded

Since the 1930s there have been a raft of federal initiatives to encourage financial institutions to make home purchase and home improvement loans to low and moderate income individuals (LMI) in low and in LMI neighborhoods. The effectiveness these efforts has been the subject of substantial scholarly research, but our focus here is on changes in LMI lending over time, through vastly different economic conditions and across metropolitan area with vastly different housing markets. We use data from Home Mortgage Disclosure Act to analyze lending between 1993 and 2016. We also concentrate on home purchase lending in this analysis, and strip out subprime loans, which were prevalent LMI areas. Our hypotheses are straightforward. We expect LMI lending to be cyclical; it is at its peak when home purchase lending is high (and the economy is strong). We also expect that LMI home purchase lending is highest in robust housing markets, even with the challenges that rising house prices present. Finally, while the general movements in lending are a function of national trends, we expect markets in Rust Belt cities and other low growth areas behave differently than coastal, western and southeastern cities. Our findings generally support these hypotheses and highlight the challenges of LMI lending in weaker housing markets, particularly in the aftermath of the Great Recession. However, our more nuanced analysis of the pattern of lending to LMI borrowers, presents a complex geography that varies greatly across metropolitan areas.

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