Finance and Economics Discussion Series: 2008-61 Screen Reader version ♣
Giving Credit where Credit is Due?
The Community Reinvestment Act and Mortgage Lending in Lower Income Neighborhoods
Neil Bhutta
November, 2008
November, 2008
| Pledge Amount ($ bil, 2004) | |
|---|---|
| Year: 1990 | 2.6 |
| Year: 1991 | 3.1 |
| Year: 1992 | 17.4 |
| Year: 1993 | 21.3 |
| Year: 1994 | 22.8 |
| Year: 1995 | 18.6 |
| Year: 1996 | 34.5 |
| Year: 1997 | 121.0 |
| Year: 1998 | 429.8 |
| Year: 1999 | 448.9 |
| Year: 2000 | 364.8 |
| Year: 2001 | 193.1 |
| Year: 2002 | 207.0 |
| Year: 2003 | 445.2 |
| Year: 2004 | 840.6 |
Note: 3-Year Moving Average, Adjusted for Inflation using CPI-USource: NCRC
| Coefficient Estimate | Coefficient + 2(Standard Error) | Coefficient - 2(Standard Error) | |
|---|---|---|---|
| Tract-to-MSA Median Family Income: 0.65 | 0.0081 | 0.0672 | -0.0510 |
| Tract-to-MSA Median Family Income: 0.66 | -0.0118 | 0.0488 | -0.0723 |
| Tract-to-MSA Median Family Income: 0.67 | -0.0157 | 0.0427 | -0.0741 |
| Tract-to-MSA Median Family Income: 0.68 | 0.0176 | 0.0650 | -0.0298 |
| Tract-to-MSA Median Family Income: 0.69 | 0.0327 | 0.0869 | -0.0215 |
| Tract-to-MSA Median Family Income: 0.7 | 0.0077 | 0.0495 | -0.0340 |
| Tract-to-MSA Median Family Income: 0.71 | -0.0151 | 0.0215 | -0.0517 |
| Tract-to-MSA Median Family Income: 0.72 | -0.0024 | 0.0524 | -0.0573 |
| Tract-to-MSA Median Family Income: 0.73 | 0.0288 | 0.0749 | -0.0174 |
| Tract-to-MSA Median Family Income: 0.74 | -0.0547 | 0.0023 | -0.1117 |
| Tract-to-MSA Median Family Income: 0.75 | -0.0774 | -0.0347 | -0.1201 |
| Tract-to-MSA Median Family Income: 0.76 | -0.0605 | -0.0256 | -0.0954 |
| Tract-to-MSA Median Family Income: 0.77 | -0.0157 | 0.0316 | -0.0630 |
| Tract-to-MSA Median Family Income: 0.78 | -0.0065 | 0.0396 | -0.0526 |
| Tract-to-MSA Median Family Income: 0.79 | 0.0347 | 0.0723 | -0.0028 |
| Tract-to-MSA Median Family Income: 0.8 | 0.0703 | 0.1151 | 0.0254 |
| Tract-to-MSA Median Family Income: 0.81 | 0.0542 | 0.0932 | 0.0151 |
| Tract-to-MSA Median Family Income: 0.82 | 0.0382 | 0.0797 | -0.0034 |
| Tract-to-MSA Median Family Income: 0.83 | 0.0030 | 0.0401 | -0.0341 |
| Tract-to-MSA Median Family Income: 0.84 | 0.0128 | 0.0613 | -0.0356 |
| Tract-to-MSA Median Family Income: 0.85 | -0.0063 | 0.0299 | -0.0426 |
| Tract-to-MSA Median Family Income: 0.86 | 0.0004 | 0.0408 | -0.0399 |
| Tract-to-MSA Median Family Income: 0.87 | -0.0262 | 0.0233 | -0.0757 |
| Tract-to-MSA Median Family Income: 0.88 | -0.0429 | 0.0082 | -0.0941 |
| Tract-to-MSA Median Family Income: 0.89 | -0.0070 | 0.0357 | -0.0497 |
| Tract-to-MSA Median Family Income: 0.90 | 0.0112 | 0.0537 | -0.0313 |
| Tract-to-MSA Median Family Income: 0.91 | -0.0013 | 0.0393 | -0.0418 |
| Tract-to-MSA Median Family Income: 0.92 | -0.0111 | 0.0223 | -0.0445 |
| Tract-to-MSA Median Family Income: 0.93 | 0.0140 | 0.0468 | -0.0189 |
| Tract-to-MSA Median Family Income: 0.94 | -0.0022 | 0.0279 | -0.0324 |
| Tract-to-MSA Median Family Income: 0.95 | 0.0004 | 0.0327 | -0.0318 |
Notes: Each point represents an estimated discontinuity from a separate regression using a
bandwidth of 0.15 around each point and a cubic control function.
| Share of Total Originations | Share of Marginal Originations | |
|---|---|---|
| Borrower Risk Group: Investor | 0.126 | 0.155 |
| Borrower Risk Group: < 20 | 0.143 | 0.089 |
| Borrower Risk Group: 20-40 | 0.178 | 0.136 |
| Borrower Risk Group: 40-60 | 0.203 | 0.144 |
| Borrower Risk Group: 60-80 | 0.196 | 0.217 |
| Borrower Risk Group: > 80 | 0.154 | 0.258 |
Notes: The first group refers to loans not for owner-occupancy. The other five groups refer to quintiles of the estimated risk distribution. See text for estimation strategy and full description of figure.
| Share of Total Originations | Share of Marginal Originations | |
|---|---|---|
| Borrower Risk Category/Quantile: Held | 0.516 | 0.562 |
| Borrower Risk Category/Quantile: GSE | 0.254 | 0.174 |
| Borrower Risk Category/Quantile: Bank/Affiliate | 0.081 | 0.126 |
| Borrower Risk Category/Quantile: Other | 0.150 | 0.140 |
Notes: Labels along X-axis refer to loan purchaser categories. The first group refers to loans held in portfolio. "GSE" refers to Fannie Mae, Freddie Mac and Ginnie Mae. "Other" refers to loans sold to financial and insurance companies, sold for private securitization or sold to unclassified purchasers. See text for estimation strategy and full description of figure.
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