Did Affordable Housing Legislation Contribute to the Subprime Securities Boom?
Federal Reserve Bank of St. Louis
Download Document| Date Published | 2012 |
| Version | |
| Primary Author | Ruben Hernandez-Murillo |
| Other Authors | Andra C. Ghent and Michael T. Owyang |
| Theme | Housing Finance Policy |
| Country |
Abstract
No. In this paper we use a regression discontinuity approach to investigate whether aff ordable housing policies influenced origination or aff ected prices of subprime mortgages. We use merged loan-level data on non-prime securitized mortgages with individual and neighborhood-level data for California and Florida. We find no evidence that lenders increased subprime originations or altered pricing around the discrete eligibility cutoff s for the Government Sponsored Enterprises' (GSEs) affordable housing goals or the Community Reinvestment Act. Although the GSEs may have played a role in the crisis, our results indicate that it was not due to their affordable housing mandates.