 Did affordable housing mandates cause the subprime mortgage crisis?Shawn Moulton Journal of Housing Economics, 2014, vol. 24, issue C, 21-38 Abstract: The 1992 Federal Housing Enterprises Financial Safety and Soundness Act (GSE Act) mandated that a specified percentage of Fannie Mae and Freddie Mac purchases come from underserved populations. A number of prominent observers have pointed to the GSE Act as a root cause of the recent housing crisis. This paper evaluates the link between the GSE Act and relaxed mortgage market standards. Using loan application-level data from the Home Mortgage Disclosure Act, I analyze whether the GSE Act’s single-family affordable housing goals altered mortgage lending or purchasing decisions. To identify this effect, I use a regression discontinuity design that exploits arbitrary cutoffs used to determine whether a loan satisfies the GSE Act goals. I find that the GSE Act’s single-family affordable housing goals increased GSE purchases from very low-income borrowers by 4.4% but had no effect on mortgage lending. These results stand up to a number of specification and robustness checks. Keywords: Government sponsored enterprises; Affordable housing goals; Homeownership (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:24:y:2014:i:c:p:21-38 DOI: 10.1016/j.jhe.2013.11.001 Access Statistics for this article Journal of Housing Economics is currently edited by H. O. Pollakowski More articles in Journal of Housing Economics from Elsevier |
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