Research Projects Housing Finance and Foreclosures
Impact Of Foreclosures On School Mobility And Performance
Housing instability significantly disrupts the lives of children and families. The Furman Center and NYU’s Institute for Education and Social Policy, along with researchers from the University of Connecticut, the Institute for Policy Research at Northwestern University, and the School of Public and Environmental Affairs at Indiana University, are studying how foreclosure and other housing disruptions affect children’s school mobility and performance. The research will test whether and how housing instability affects students’ educational outcomes, using longitudinal data that links foreclosures and other kinds of housing upheavals to individual public school student records in four major markets suffering from unusual housing instability—New York City, San Diego and Fresno Counties in California, and the state of Florida. This research builds on our earlier work documenting the scale and concentration of children whose homes have received a foreclosure notice and the associated impacts on student mobility.
Modifications Of Distressed Mortgages
For policymakers as well as lenders, understanding the determinants of successful modifications – those that allow the homeowner to stay current over the long-term – is crucial. Yet too little is known about basic questions: Which borrowers receive what kinds of modifications? What happens to borrowers following modification, and how is that affected by the nature of the modifications? What characteristics of a borrower best predict whether the borrower will stay current after a modification? Are certain loan provisions associated with the likelihood that the loan will be modified, or that the modification will be successful? Do characteristics of the property, or the neighborhood in which it is located, affect the propensity of loans to be modified, or the outcomes of modifications? Our research, conducted with the U.S. Office of the Comptroller of the Currency, will shed new light on these issues using a unique combination of data on borrowers in New York City.
Seriously Delinquent Mortgage Borrower Outcomes
Once a borrower falls behind on payments, a variety of possible outcomes can occur. Some delinquent borrowers catch up with mortgage payments and remain in their homes, either on their own or through a loan modification. Others refinance or sell the home and repay the loan before foreclosure proceedings are completed. Some borrowers are unable to prevent the foreclosure process from progressing to an auction of the home. For policymakers, the likelihood that a borrower default will result in these various outcomes has important consequences, such as how long the property is likely to remain vacant, or whether the new owner will be an owner-occupant. Building upon our research about which characteristics of the borrower, property, neighborhood, lender or loan terms best predict which borrowers will become delinquent on their mortgages, this project combines datasets on foreclosure filings, loan terms, loan performance, initial borrower characteristics, and physical and neighborhood characteristics of distressed properties to examine how those characteristics are correlated with the pathways and eventual outcomes of distressed loans in New York City.
The Impact Of Foreclosures On Neighborhood Crime
As foreclosures continue to mount across the country, local leaders are concerned that foreclosures—and the abandonment they often precipitate—may lead to increases in crime. The Furman Center has assembled a unique dataset, which includes the location of every foreclosure and reported crime in New York City between 2004 and 2008, in order to measure the impact foreclosures on a city block have on criminal activity on that block. By providing empirical evidence on the impact of mortgage foreclosures on neighborhood crime, this research will help to guide local and national policymakers’ responses to the foreclosure crisis. This research will also explore the relationship between foreclosures and crime in several cities around the country.
The Recent Resurgence of FHA Lending
During the peak of the housing boom, only a small share of homebuyers relied on loans insured by the Federal Housing Administration (FHA) in order to finance their purchases. Since the collapse of the subprime mortgage market in 2007, however, FHA lending has ballooned, both in absolute terms and as a share of all home purchase lending. As a result, there is new interest in how FHA works, its historical role, and how well its loans have performed. This project will help policymakers understand FHA’s role in the mortgage market as pressure grows to reform or restrict the FHA in the coming years. As an early part of this project, we explored the possible impact of recent reductions in the maximum size of loans eligible for FHA insurance, along with reductions in the loan size eligible for backing by Fannie Mae and Freddie Mac, in a white paper released in early October.
The Six Trillion Dollar Loss Of Housing Wealth In The Great Recession: What Are The Long-Term Consequences?
Since the onset of the Great Recession, falling home values have destroyed more than six trillion dollars in household wealth. This project, which will produce a series of papers and policy briefs, studies the distribution of those equity losses, compares household perceptions of equity losses to actual measured losses, and estimates how both measured and perceived equity losses are affecting household behavior. Specifically, the project uses data from the American Housing Survey (AHS), the Health and Retirement Study (HRS), and the Federal Reserve Board of New York’s Consumer Credit Panel to estimate changes in homeowner equity and how those changes influence household decisions about retirement, savings, investments in education, and household composition. By investigating in detail the impacts the housing crisis has had on the housing wealth of different populations and studying behavioral adjustments to those losses, this project will help inform ongoing debates about whether and how to help families affected by the housing crash.
