Publications Working Papers
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Working Paper
The Foreclosure Crisis and Community Development: Exploring REO Dynamics in Hard-Hit Neighborhoods
As the foreclosure crisis continues, many communities are faced with a glut of properties that have completed the foreclosure process and are now owned by banks or other mortgage lenders. These properties, referred to as “real estate owned (REO),” often sit vacant for extended periods and, recent studies suggest, depress neighboring property values. In this article we shed new light on the “REO problem” by studying the stock of REO properties at the neighborhood level in three urban areas: New York City, Miami-Dade County, Florida, and Fulton County, Georgia. We find that in each area, the number of REO properties was declining as of the end of 2011, and even in the hardest hit neighborhoods, only a small share of REO properties were purchased and “flipped” by investors. However, in Miami-Dade and Fulton Counties, a small number of neighborhoods continued to have very high concentrations of REO properties, and the REO stock in all three areas was increasingly made up of properties that had been in REO for more than three years.
Ingrid Gould Ellen, Josiah Madar, Mary Weselcouch. April 2013.
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Working Paper
Transferable Development Rights Programs: ‘Post’ Zoning?
Transferable Development Rights (TDR) programs allow property owners to sell unused development capacity at their property and transfer it to another site, where it is typically used to increase the permitted size of a development. In recent years, New York City has enacted programs that use TDRs in increasingly sophisticated ways. These uses share three common attributes: an increased focus on directing the location and density at sites that receive development rights; the use of TDRs as an integral component of more comprehensive rezoning initiatives; and the creation of regulatory incentives that strengthen the market for TDRs. In this essay, we conclude that TDRs in New York can no longer be understood just as a creative mechanism to soften the effect of rigid zoning restrictions, but should also be recognized as a tool land use decision makers increasingly use in place of, or in tandem with, upzonings, bonuses, and other devices for increasing density.
Vicki Been, John Infranca. December 2012.
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Working Paper
The Legal Salience of Taxation
Many tax enforcement regimes incorporate taxpayer-initiated administrative procedures for adjusting tax liabilities. Using a novel dataset, this article examines the property tax appeals process in New York City and finds that the salience of the property tax (it’s visibility or prominence to taxpayers) has a large effect on the probability of appealing. I find that differences in salience across property owners, unwittingly induced by government policy and private actors, effectively shifts the property tax burden toward certain mortgagors, who are more likely to be racial minorities, foreign-born, and working families with children.
Andrew T. Hayashi. September 2012.
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Working Paper
Essay: Sticky Seconds—The Problems Second Liens Pose to the Resolution of Distressed Mortgages
To better understand whether and how second liens might prevent efficient resolutions of borrower distress and to assess how second lien holders could be encouraged to cooperate with efficient resolutions without undermining the financial interests of the banks, we reviewed existing data and research, as well as debates among both academics and industry experts about the role second liens might be playing in slowing the recovery of the housing market. This article reports the results of our research and the roundtable discussion. It first explores what we know about the prevalence and delinquency rates of different types of second liens, the extent to which banks are exposed to losses on the liens, and the extent to which the banks already have accounted for those expected losses. It then reviews the various reasons that second liens have interfered with the efficient resolution of distressed mortgages, and documents advances that recently have been made in addressing those problems. Finally, the article examines the most promising proposals for reducing the transaction costs and frictions that are behind many of the current problems second liens are posing, as well as proposals to prevent similar problems from arising in the future. We focus our analysis of solutions on programs to remove barriers to greater coordination between first and second lien holders, rather than on the incentive approaches that have already been attempted.
Vicki Been, Howell Jackson, Mark Willis. August 2012.
distressed mortgages, housing finance, mortgage foreclosures, second liens
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Working Paper
What Can We Learn about the Low Income Housing Tax Credit Program by Looking at the Tenants?
Using tenant-level data from fifteen states that represent more than thirty percent of all Low Income Housing Tax Credit (LIHTC) units, this paper examines tenant incomes, rental assistance and rent burdens to shed light on key questions about our largest federal supply-side affordable housing program. Specifically, what are the incomes of the tenants, and does this program reach those with extremely low incomes? What rent burdens are experienced, and is economic diversity within developments achieved? We find that more than forty percent of tenants have extremely low incomes, and the overwhelming majority of such tenants also receive some form of rental assistance. Rent burdens are generally higher than for HUD housing programs, but vary greatly by income level and are lowered by the sizable share of owners who charge below maximum rents. Finally, we find evidence of both economically diverse developments and those with concentrations of households with extremely low incomes.
Katherine O’Regan and Keren Horn. July 2012.
affordable housing, neighborhoods, race, segregation, subsidy
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Working Paper
Pathways After Default: What Happens to Distressed Mortgage Borrowers and Their Homes?
We use a detailed dataset of seriously delinquent mortgages to examine the dynamic process of mortgage default – from initial delinquency and default to final resolution of the loan and disposition of the property. We estimate a two-stage competing risk hazard model to assess the factors associated with whether a borrower behind on mortgage payments receives a legal notice of foreclosure, and with what ultimately happens to the borrower and property. In particular, we focus on a borrower’s ability to avoid a foreclosure auction by getting a modification, by refinancing the loan, or by selling the property. We find that the outcomes of the foreclosure process are significantly related to: the terms of the loan; the borrower’s credit history; current loan-to-value and the presence of a junior lien; the borrower’s post-default payment behavior; the borrower’s participation in foreclosure counseling; neighborhood characteristics such as foreclosure rates, recent house price depreciation and median income; and the borrower’s race and ethnicity.
Sewin Chan, Claudia Sharygin, Vicki Been, Andrew Haughwout. June 2012.
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Working Paper
Pathways to Integration: Examining Changes in the Prevalence of Racially Integrated Neighborhoods
Few researchers have studied integrated neighborhoods, yet these neighborhoods offer an important window into broader patterns of segregation. We explore changes in racial integration in recent decades using decennial census tract data from 1990, 2000, and 2010. We begin by examining changes in the prevalence of racially integrated neighborhoods and find significant growth in the presence of integrated neighborhoods during this time period, with the share of metropolitan neighborhoods that are integrated increasing from just under 20 percent to just over 30 percent. We then shed light on the pathways through which these changes have occurred. We find both a small increase in the number of neighborhoods becoming integrated for the first time during this period and a more sizable increase in the share of integrated neighborhoods that remained integrated. Finally, we offer insights about which neighborhoods become integrated in the first place and which remain stably integrated over time.
Ingrid Gould Ellen, Keren Horn, Katherine O’Regan. May 2012.
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Working Paper
American Murder Mystery Revisited: Do Housing Voucher Households Cause Crime?
In recent years, the U.S. Department of Housing and Urban Development (HUD) has shifted resources from public housing to the Housing Choice Voucher (HCV or “voucher”) program. There were 2.2 million vouchers nationwide in 2008, compared to 1.2 million public housing units. Although the academic and policy communities have welcomed this shift, community opposition to vouchers can be fierce, due to perceptions that voucher-holders will both reduce property values and heighten crime. Despite the public concerns, however, there is virtually no research that systematically examines the link between the presence of voucher holders in a neighborhood and crime. Our paper uses longitudinal, neighborhood-level crime and voucher utilization data in 10 large U.S. cities over 12 years, and finds voucher-holders moving to a neighborhood does not, in fact, increase crime. We do see, on the other hand, that households with vouchers tend to move to communities when crime rates are rising.
Ingrid Gould Ellen, Michael C. Lens, Katherine O’Regan. March 2012.
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Working Paper
Loan Modifications: What Works
We use a unique dataset that combines data on loan, borrower, property, and neighborhood characteristics of modified mortgages on properties in New York City to examine the determinates of successful modifications. From November 2007 through March 2011, over 2.1 million mortgages were modified in the United States, and policymakers have heralded such modifications as a key to addressing the ongoing foreclosure crisis. This dataset includes both HAMP modifications and proprietary modifications. The analysis builds upon a prior paper in which the determinants of loan modifications were examined.
Ioan Voicu, Vicki Been, Mary Weselcouch, Andrew Tschirart . October 2011.
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Working Paper
Determinants of the Incidence of Loan Modifications
Loan modifications ensure that borrowers avoid foreclosure and save their credit record. These modifications are also beneficial to the neighborhoods in which these borrowers reside, preventing vacancies and high rates of turnover. This analysis looks at loan delinquency and repayment plan data from New York City borrowers to provide the strongest predictors of modifications or liquidation of property. In this paper, we answer key questions about loan modifications, including how the identity, property or neighborhood of the borrower affects the likelihood of receiving a modification. We also look at the role of residential segregation, as well as the identity of the loan’s servicer as an influence on variations in borrower access to loan modifications.
Vicki Been, Mary Weselcouch, Ioan Voicu, Scott Murff. September 2011.
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