The Financial Crisis and the Role of Real Estate Investors

Wilbert van der Klaauw, Joseph Tracy, Donghoon Lee and Andrew Haughwout

No 201, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: Our analysis is based on a unique administrative panel dataset based on quarterly data from consumer credit reports and covering the 1999-2009 period. The data allow us to look at all the mortgage and non-mortgage debts at the individual level and also at the household level. We follow individuals and households who have had multiple first mortgages at any point between 2004 and 2009, and track their mortgage balances and delinquencies. Preliminary results show that, initially in 2004, investors were six times safer than single mortgage holders. However, as of 2008, they contributed more than 40% of all seriously delinquent balances nationwide and were 50% more likely to be seriously delinquent than the single first mortgage holders. This suggests that there was a significant role of initially prime borrowers who invested heavily in the housing market in the course of the housing crisis.

Date: 2011
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