A New Look at the U.S. Foreclosure Crisis: Panel Data Evidence of Prime and Subprime Borrowers from 1997 to 2012

Fernando Ferreira and Joseph Gyourko

No 21261, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Utilizing new panel micro data on the ownership sequences of all types of borrowers from 1997-2012 leads to a reinterpretation of the U.S. foreclosure crisis as more of a prime, rather than a subprime, borrower issue. Moreover, traditional mortgage default factors associated with the economic cycle, such as negative equity, completely account for the foreclosure propensity of prime borrowers relative to all-cash owners, and for three-quarters of the analogous subprime gap. Housing traits, race, initial income, and speculators did not play a meaningful role, and initial leverage only accounts for a small variation in outcomes of prime and subprime borrowers.

JEL-codes: E0 G0 H0 J0 R0 (search for similar items in EconPapers)
Date: 2015-06
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-ure
Note: AP CF EFG IFM LS ME PE POL
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