2018 Best Article in the Journal of Urban Affairs Award
UAA Community News
Urban Affairs Association
12 April 2018
Photo courtesy of rhlphoto.com
Image: Carolina Reid and Edward Goetz, Award Committee Chair of the University of Minnesota
Carolina Reid, assistant professor of city and regional planning and faculty research adviser at UC Berkeley’s Terner Center for Housing Innovation, was recently honored with 2018’s Best Article Award in the Journal of Urban Affairs.
Titled “Revisiting the subprime crisis: The dual mortgage market and mortgage defaults by race and ethnicity,” the article was co-authored by Reid, Debbie Bocian of Abt Associates, Wei Li of the Urban Institute and Roberto Quercia of the University of North Carolina at Chapel Hill.
The authors were awarded at the Urban Affairs Association’s 48th annual conference in Toronto, Ontario earlier this month.
Reid’s article is focused on the foreclosure crisis facing the United States and the racial dimensions that intersect the crisis.
The authors used national data from 2004-2007 to examine “loan originators, loan terms, racial/ethnic identity of borrowers, and the full set of underwriting criteria for well over 900,000 loans originated just prior to the onset of the foreclosure crisis.” They then rigorously analyzed the data and found that “Black and Hispanic borrowers were systematically offered different loan products, with material consequences.”
In “Revisiting the Subprime Crisis,” the authors begin by stating that between 2006 and 2013, roughly 13.7 million homes went into foreclosure and at least 9 million U.S. households lost their homes to foreclosure. They write that the United States’ foreclosure crisis has caused the worst economic downturn since the Great Depression and argue that the crisis has resulted in significant disparities in housing equity and wealth.
Black and Hispanic households and communities appear to be disproportionately affected by the foreclosure crisis which has led to repercussions in terms of credit standards and lending to these communities.
“The research reveals that Blacks and Hispanics systematically received loans with different terms than comparably situated non-Hispanic Whites: they were more likely to get a higher priced loan, more likely to pay a significantly higher interest rate, and more likely to be sold a product with a teaser interest rate and/or prepayment penalty,” the article states.
Reid’s article reveals just how important it is to implement consumer protection and the need for stronger regulatory oversight of financial markets. That being said, it is unlikely that federal regulations alone will resolve the foreclosure crisis. It is important that state and local governments also take a role in combating the negative fallout of the housing crisis. Finally, it is vital that a broader range of interventions be considered to combat lending discrimination.
Read the full article here.