Working Paper: NBER ID: w15824
Authors: Price V. Fishback; Alfonso Flores-Lagunes; William Horrace; Shawn E. Kantor; Jaret Treber
Abstract: Problems with mortgage financing are widely considered to be a major cause of the recent financial meltdown. Several modern programs have been designed to mimic the Home Owners' Loan Corporation of the 1930s. The HOLC replaced the toxic assets on the balance sheets of financial institutions by buying troubled mortgages and then refinanced the mortgages to allow home owners to avoid losing their homes. We analyze the impact of the HOLC on the nonfarm rental and owned home markets after developing a new data set for over 2800 counties in the United States. In counties with fewer than 50,000 people, where financial markets were not as well developed as in larger cities, the HOLC's financial interventions helped stimulate the demand for owned housing more than it influenced the supply. In rental markets the HOLC appears to have contributed to an increase in the supply of rental housing that was likely associated the improvement of the balance sheets of lending institutions.
Keywords: No keywords provided
JEL Codes: G28; N12; N42; N9; R31; R38; R51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| HOLC funding (I22) | demand for owned homes (R21) |
| HOLC funding (I22) | rental housing supply (R31) |
| reduced foreclosure rates (G21) | number of renters (R21) |
| HOLC funding (I22) | reduced foreclosure rates (G21) |