Finance and Economics Discussion Series (FEDS)
April 2010
GSE Activity and Mortgage Supply in Lower-Income and Minority Neighborhoods: The Effect of the Affordable Housing Goals
Abstract:
I estimate the credit supply effect of the Underserved Areas Goal(UAG), which establishes GSE purchase goals for mortgages to lower-income and minority neighborhoods. Taking advantage of discontinuous census tract eligibility rules and abrupt changes in tract eligibility in 2005, I find evidence of a small UAG effect on GSE activity, and this increase does not appear to crowd-out FHA and subprime lending. The results also indicate that the GSEs exploit the law's lack of precision targeting, yielding effects that might diverge from the law's intent.
Full paper (Screen Reader Version): Revised | Original
Original paper (PDF)Keywords: GSE, regression discontinuity, FHA, affordable housing goals, homeownership, subprime mortgage, underserved areas
PDF: Full Paper
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