Housing & Community Development

Pathways After Default: What Happens to Distressed Mortgage Borrowers and Their Homes

Pathways After Default: What Happens to Distressed Mortgage Borrowers and Their Homes
Journal of Real Estate Finance and Economics 48(2), February 2014.

Sewin Chan, Vicki Been, Andrew Haughwout and Claudia Sharygin
02/01/2014

We use a detailed dataset of seriously delinquent mortgages to examine the dynamic process of mortgage default—from initial delinquency and default to final resolution of the loan and disposition of the property. We estimate a two-stage competing risk hazard model to assess the factors associated with post-default outcomes, including whether a borrower receives a legal notice of foreclosure. In particular, we focus on a borrower’s ability to avoid a foreclosure auction by getting a modification, by refinancing the loan, or by selling the property. We find that the outcomes of the foreclosure process are significantly related to: loan characteristics including the borrower’s credit history, current loan-to-value and the presence of a junior lien; the borrower’s post-default payment behavior, including the borrower’s participation in foreclosure counseling; neighborhood characteristics such as foreclosure rates, recent house price depreciation and median income; and the borrower’s race and ethnicity.

Buying Sky: The Market for Transferable Development Rights in New York City

Buying Sky: The Market for Transferable Development Rights in New York City
Furman Center Policy Brief; October 2013

The Furman Center for Real Estate & Urban Policy
10/22/2013

New York City’s zoning code (known as the “Zoning Resolution”) regulates land use in part by limiting the square footage of the building that landowners can develop on their property. Some buildings are built below the applicable limit—because they are constrained by other regulations such as historic preservation rules, they were built subject to earlier, more-restrictive zoning rules, or the owner chose to develop the property less intensely than the zoning allows because of market conditions or other considerations applicable when the building was built. The Zoning Resolution provides limited opportunities for an owner of land that is less than fully developed to transfer her unused development rights to other properties. This enables the recipients of those development rights (known at that point as “transferrable development rights,” “TDRs,” or “air rights”) to develop larger buildings than the Zoning Resolution otherwise permits, while the seller loses the right to ever use those rights on her own property.

Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia

Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia
W. W. Norton & Company

Anthony M. Townsend
10/07/2013

An unflinching look at the aspiring city-builders of our smart, mobile, connected future.

We live in a world defined by urbanization and digital ubiquity, where mobile broadband connections outnumber fixed ones, machines dominate a new "internet of things," and more people live in cities than in the countryside. In Smart Cities, urbanist and technology expert Anthony Townsend takes a broad historical look at the forces that have shaped the planning and design of cities and information technologies from the rise of the great industrial cities of the nineteenth century to the present. A century ago, the telegraph and the mechanical tabulator were used to tame cities of millions. Today, cellular networks and cloud computing tie together the complex choreography of mega-regions of tens of millions of people.

In response, cities worldwide are deploying technology to address both the timeless challenges of government and the mounting problems posed by human settlements of previously unimaginable size and complexity. In Chicago, GPS sensors on snow plows feed a real-time "plow tracker" map that everyone can access. In Zaragoza, Spain, a "citizen card" can get you on the free city-wide Wi-Fi network, unlock a bike share, check a book out of the library, and pay for your bus ride home. In New York, a guerrilla group of citizen-scientists installed sensors in local sewers to alert you when stormwater runoff overwhelms the system, dumping waste into local waterways.

As technology barons, entrepreneurs, mayors, and an emerging vanguard of civic hackers are trying to shape this new frontier, Smart Cities considers the motivations, aspirations, and shortcomings of them all while offering a new civics to guide our efforts as we build the future together, one click at a time.

Race and neighborhoods in the 21st century: What does segregation mean today?

Race and neighborhoods in the 21st century: What does segregation mean today?
Regional Science and Urban Economics (2013), http://dx.doi.org/10.1016/j.regsciurbeco.2013.09.006

De la Roca, Jorge, Ingrid Gould Ellen and Katherine M. O'Regan.
09/14/2013

Noting the decline in segregation between blacks and whites over the past several decades, some recent work argues that racial segregation is no longer a concern in the 21st century. In response, this paper revisits some of the concerns that John Quigley raised about racial segregation and neighborhoods to assess their relevance today. We note that while segregation levels between blacks and whites have certainly declined, they remain quite high; Hispanic and Asian segregation have meanwhile remained unchanged. Further, our analysis shows that the neighborhood environments of minorities continue to be highly unequal to those enjoyed by whites. Blacks and Hispanics continue to live among more disadvantaged neighbors, to have access to lower performing schools, and to be exposed to more violent crime. Further, these differences are amplified in more segregated metropolitan areas.

Shifting the Burden: Examining the Undertaxation of Some of the Most Valuable Properties in New York City

Shifting the Burden: Examining the Undertaxation of Some of the Most Valuable Properties in New York City
Furman Center Policy Brief; July 2013

The Furman Center for Real Estate and Urban Policy
07/02/2013

Some of New York City’s most valuable properties in its highest-cost neighborhoods are significantly and persistently undervalued, according to Shifting the Burden. The report identifies 50 individual co-ops in 46 buildings that were sold in 2012 for more than the New York City Department of Finance’s estimate of the market value of the entire building. This undervaluation has significant consequences for the distribution of tax burdens in New York City.

The Role of Neighborhood Characteristics in Mortgage Default Risk: Evidence from New York City

The Role of Neighborhood Characteristics in Mortgage Default Risk: Evidence from New York City
Journal of Housing Economics 22(2), June 2013

Sewin Chan, Michael Gedal, Vicki Been & Andrew Haughwout
06/01/2013

Using a rich database of non-prime mortgages from New York City, we find that census tract level neighborhood characteristics are important predictors of default behavior, even after controlling for an extensive set of controls for loan and borrower characteristics. First, default rates increase with the rate of foreclosure notices and the number of lender-owned properties (REOs) in the tract. Second, default rates on home purchase mortgages are higher in census tracts with larger shares of black residents, regardless of the borrower’s own race. We explore possible explanations for this second finding and conclude that it likely reflects differential treatment of black neighborhoods by the mortgage industry in ways that are unobserved in our data.

How New York Housing Policies Are Different -- and Maybe Why

How New York Housing Policies Are Different -- and Maybe Why
In Andrew Beveridge and David Halle, New York City-Los Angeles: The Uncertain Future. Oxford University Press, 2013.

Ellen, I.G. & O'Flaherty, B.
05/07/2013

Almost everyone says New York City is exceptional, and many people think that housing is one of the most exceptional aspects of New York life. But New York’s housing conditions are not so different from those in other large US cities, or at least not in the ways that are commonly believed. Policies, not conditions, are what truly set New York’s housing market apart.  Our aim in this chapter is to describe New York City’s policies, to explore how and why they differ from those in Los Angeles and other large cities, and whether they have shaped how New York City’s housing market has weathered the recent downturn. The policies we consider are public housing, in rem properties, other subsidized housing, rent regulation, housing allowances, city capital subsidies for construction and rehabilitation, special needs housing, local tax structures, and building codes. Do unusual housing market conditions lead to these unusual policies? Do some common factors cause both unusual policies and conditions? Naturally, we cannot answer these questions definitively. But we can offer some alternative explanations.

Why Do Higher Income Households Move Into Low Income Neighborhoods: Pioneering or Thrift?

Why Do Higher Income Households Move Into Low Income Neighborhoods: Pioneering or Thrift?
Urban Studies, September 2013; vol. 50, 12: pp. 2478-2495.

Ellen, Ingrid, Katherine O’Regan and Keren Horn
05/01/2013

This paper offers several hypotheses about which US higher-income households choose to move into low-income neighbourhoods and why. It first explores whether the probability that a household moves into a relatively low-income neighbourhood (an RLIN move) varies with predicted household and metropolitan area characteristics. Secondly, it estimates a residential choice model to examine the housing and neighbourhood preferences of the households making such moves. Thirdly, it explores responses to survey questions about residential choices. Evidence is found that, in the US, households who place less value on neighbourhood services and those who face greater constraints on their choices are more likely to make an RLIN move. No evidence is found that households making RLIN moves are choosing neighbourhoods that are more accessible to employment. Rather, it is found that households making RLIN moves appear to place less weight on neighbourhood amenities than other households and more weight on housing costs.

Racial Dynamics of Subprime Mortgage Lending at the Peak

Racial Dynamics of Subprime Mortgage Lending at the Peak
Faber, Jacob W. 2013. “Racial Dynamics of Subprime Mortgage Lending at the Peak.” Housing Policy Debate, 23(2): 328-349.

Faber, Jacob William
04/24/2013

Subprime mortgage lending in the early 2000s was a leading cause of the Great Recession. From 2003 to 2006, subprime loans jumped from 7.6% of the mortgage market to 20.1%, with black and Latino borrowers receiving a disproportionate share. This article leveraged the Home Mortgage Disclosure Act data and multinomial regression to model home-purchase mortgage lending in 2006, the peak of the housing boom. The findings expose a complicated story of race and income. Consistent with previous research, blacks and Latinos were more likely and Asians less likely to receive subprime loans than whites were. Income was positively associated with receipt of subprime loans for minorities, whereas the opposite was true for whites. When expensive (jumbo) loans were excluded from the sample, regressions found an even stronger, positive association between income and subprime likelihood for minorities, supporting the theory that wealthier minorities were targeted for subprime loans when they could have qualified for prime loans. This finding also provides another example of an aspect of American life in which minorities are unable to leverage higher class position in the same way as whites are. Contrary to previous research, model estimates did not find that borrowers paid a penalty (in increased likelihood of subprime outcome) for buying homes in minority communities.

Hong Kong and Other World Cities

Hong Kong and Other World Cities
In Aging in Hong Kong: A comparative perspective. pp. 5 - 30. Woo, J (ed.) Springer Publishing Company

Rodwin, VG.
01/01/2013

With population aging and increasing urbanization, it is important to examine the quality of life of older people living in cities, in particular world cities. However, few comparative studies of world cities examine their health, long-term care systems, or the characteristics of their older populations. To assess how well world cities are addressing the challenges associated with aging populations, it is helpful to review comparable data on the economic and health status of older persons, as well as the availability and use of health, social, and long-term care services. By extending the work of the “CADENZA: A Jockey Club Initiative for Seniors” Project and the World Cities Project, this chapter compares three world cities—Hong Kong, New York City, and London. The three world cities are similar in the size and proportion of their older populations, but the characteristics of older people and the health and long-term care systems available to them differ in significant ways. These comparisons reveal how Hong Kong, New York City, and London are responding to a rapidly aging population. They should be valuable to other cities that face the challenges of population aging.

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