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The following discussion papers examine issues of affordable housing, community and economic development, financial education, and consumer credit and payments that affect low- and moderate-income people and communities.
Gentrification has provoked considerable debate and controversy about its effects on neighborhoods and the people residing in them. This study draws on a unique, large-scale consumer credit database to examine the mobility patterns of residents in gentrifying neighborhoods in the city of Philadelphia from 2002 to 2014. We find that residents in gentrifying neighborhoods have slightly higher mobility rates than those in nongentrifying neighborhoods, but they do not have a higher risk of moving to a lower-income neighborhood. Moreover, gentrification is associated with some positive changes in the financial health of residents as measured by individuals’ credit scores. However, when more vulnerable residents (low-score, longer-term residents, or residents without mortgages) move from gentrifying neighborhoods, they are more likely to move to lower-income neighborhoods and neighborhoods with lower values on quality-of-life indicators. The results reveal the nuances of mobility in gentrifying neighborhoods and demonstrate how the positive and negative consequences of gentrification are unevenly distributed.
The department has released a series of discussion papers on home mortgage appraisals. The first paper of the series, released in June 2014, focuses on the pattern of appraisal bias in the Third Federal Reserve District. The second paper, released in August 2014, focuses on the impact of the Home Valuation Code of Conduct on appraisal and mortgage outcomes nationally. Detailed descriptions and the full studies are available below:
We analyze a large, nationally representative anonymized data set of consumers with a credit report from 2002 to 2010. This is a period that encompasses a boom and bust in consumer credit. Using census data, we classify consumers into four categories of relative neighborhood income and find that, over time, the number and proportion of consumers with a credit report fell in low- and moderate-income neighborhoods and rose in higher-income neighborhoods. Population trends evident from census data explain only a portion of these changes in the location of the credit bureau population. In most instances, the primary driver reflects residential migration from relatively poorer neighborhoods to ones with relatively higher incomes. Patterns of entry into or exit from the credit bureau population were correlated with the credit cycle, as well as with relative neighborhood income, resulting in slower sample growth in low- and moderate-income neighborhoods during periods of credit contraction. These results are interesting in themselves, but they are also important for interpreting empirical results estimated from credit bureau data.
This paper examines borrower characteristics over the course of the previous decade, a period in which the FHA experienced both a sharp decline in its market share and lending volume as the subprime segment expanded and a subsequent reversal of fortune as it emerged as one of the major supports of the housing market in the wake of the subprime collapse. The report provides information on trends in borrower cohorts along such dimensions as first-time homebuyer status, income, and FICO score; examines variations across regions in overall lending trends and borrower characteristics; considers what borrower patterns in post-subprime years may suggest about the nature of the FHA borrower pool going forward; and draws on the paper’s empirical findings to identify factors that policymakers might consider in evaluating how different proposals for the evolution of the housing finance sector might affect the nature of FHA lending.
Based on a review and assessment of the literature on the costs and benefits of homeownership, provides a framework for public policy toward lower-income homeownership through an analysis of how those costs and benefits are affected by the homebuyer's income. Makes the case that public policy and resources should be directed less toward maximizing the number of lower-income homeowners and more toward maximizing the quality and stability of the homeownership experience for lower-income owners; offers a series of specific policy recommendations to that end.
Analyzes the racial gap in subprime mortgages over time. The study estimates a portion of the gap that cannot be attributed to such characteristics as income, credit score, loan amount, degree of documentation, denial rate, residence in a minority tract, and debt-to-income ratio. It concludes that the unexplained portion suggests that bias in mortgage lending cannot be ruled out.
Reviews and assesses the existing literature on the potential economic impact of introducing casino gambling into a community or region, first by discussing the casinos’ effect on economic activity and growth within a community or region, and then by exploring their effect on government revenues. Also discusses the literature related to the economic impact of social costs widely associated with gambling, such as increases in crime, bankruptcy, and problem gambling.
Can be found in the Special Reports section of the website.
Examines the use of alternative financial service providers (AFSPs) such as check-cashing outlets and pawnshops in Philadelphia, Montgomery, Delaware, and Allegheny counties. Also explores whether these providers are disproportionately serving minority and low-income areas.
Continues the use of the spatial void hypothesis methodology to analyze the location of alternative financial service providers, such as check cashing outlets and pawn shops, in New Castle County, Delaware, and Atlantic, Mercer, Monmouth, and Passaic counties in New Jersey. Also explores whether these providers are disproportionately serving minority and low-income areas.
Describes how ROSCAs work and discusses the benefits that accrue to ROSCA participants and some of the costs they incur. Of particular interest is the introduction of a partial data set collected from a local ROSCA, which offers a glimpse of the capital costs ROSCA participants face and which could ultimately be contrasted with the capital costs faced by borrowers at mainstream financial institutions.
Analyzes an unsuccessful attempt to establish a financing intermediary for the development of environmentally contaminated property (commonly known as brownfields) in Pennsylvania. The proposed intermediary was called Financial Resources for the Environment.
Assesses existing research on the effectiveness of home-ownership education and counseling and opportunities for future research.
Gives guidance on the best use of funds appropriated by the Housing and Economic Recovery Act of 2008 for the purpose of assisting states, counties, and cities in their efforts to stablize hard-hit neighborhoods. The discussion paper was written by Alan Mallach, visiting scholar at the Bank.
Presents the results of a Philadelphia Fed study that analyzes whether the community development efforts of a nonprofit in Camden, NJ, have an effect on local neighborhoods.
Summarizes the obstacles to financing small multifamily rental properties in New Jersey and makes recommendations for policies to address this credit need.
Describes noteworthy multifamily-assistance programs around the country, including mortgage-insurance, secondary-market, technical-assistance, and tax-abatement programs. Produced by the Federal Reserve Banks of New York and Philadelphia.