What We’re Reading Now

(May 2018) This month, instead of a policy discussion, we’re bringing you some reading recommendations. The first three recommendations shed light on topics that we’ve long followed by bringing new data analysis to the discussion. The fourth is a recent government report on the Community Reinvestment Act, along with some comments on the report by the National Community Reinvestment Coalition.

Our first “selection of the month” is a recent paper on small dollar mortgages issued by the Urban Institute’s Housing Finance Policy Center. This report examines the availability of small-dollar mortgages (up to $70,000) for home purchases, refinances, and improvements, presenting a wealth of information on borrower and loan characteristics, production channels, and the geographic distribution of low-cost homes. While those of you in the NCST community will be quite familiar with the problem of access to credit for small mortgages, this report offers a useful compendium of data that has not been pulled together before in this format.

Another Urban Institute paper that I found fascinating is their recent exploration of default and loss behaviors of purchase, rate refinance and cash out refinance loans. Their data shows that cash out refinances have performed most poorly, especially during the financial crisis. Among other things, the report provides additional evidence that lending to LMI homebuyers was likely not the main reason for the mortgage defaults that led to the financial crisis. Rather, it was the industry’s focus on pushing refinancing, and especially cash out
refinancing.

A report by Zillow Home shows that values in the vast majority of neighborhoods that were “redlined” by the federal government 80 years ago are lower now than in areas rated more highly. While those of us who work in these neighborhoods are well aware that redlining’s legacy is still with us, this mapping project provides the hard evidence of its persistence.

Last month, the U.S. Department of the Treasury released recommendations to modernize the Community Reinvestment Act (CRA). The recommendations were issued to the primary CRA regulators, the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corporation. In response to this report, the National Community Reinvestment Coalition issued an analysis that provides insight into the various recommendations, some of which are positive and others of which may pose risks to our work in communities.

As always, if you have any questions or would like to discuss any of these reading recommendations, please contact Julia Gordon.

This column was originally published in May 2018.