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Race and Subprime Lending Frequency: Understanding Subprime Lending's Role in the St. Louis Vacancy Crisis

Publication ,  Journal Article
Morgenstern, G; Becker, C
Published in: Review of Black Political Economy
January 1, 2023

Using loan-level data, this analysis considers the intersection of race, subprime home loans, and the current vacancy crisis in St. Louis, Missouri. Borrowers in Black areas in the north of St. Louis City and St. Louis County received subprime home loans at higher frequencies during the subprime boom period of 2003–2007 than those in White areas, with differences in balloon loans especially stark. Specifically, borrowers in Black neighborhoods received subprime loans more frequently than those with equal FICO scores in White neighborhoods. As a result of these differential loan terms, North City and inner ring “First Suburb” areas saw more foreclosure and borrower payment delinquency, which in turn were highly associated with home vacancy, controlling for other risk factors. However, foreclosure was no longer a significant predictor of home vacancy after controlling for demographic factors and FICO score, indicating that the unequal loan terms may have driven much of the increase in home vacancy in the St. Louis area since the Great Recession.

Duke Scholars

Published In

Review of Black Political Economy

DOI

EISSN

1936-4814

ISSN

0034-6446

Publication Date

January 1, 2023

Related Subject Headings

  • Economics
  • 1402 Applied Economics
 

Citation

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Morgenstern, G., & Becker, C. (2023). Race and Subprime Lending Frequency: Understanding Subprime Lending's Role in the St. Louis Vacancy Crisis. Review of Black Political Economy. https://doi.org/10.1177/00346446231164167
Morgenstern, G., and C. Becker. “Race and Subprime Lending Frequency: Understanding Subprime Lending's Role in the St. Louis Vacancy Crisis.” Review of Black Political Economy, January 1, 2023. https://doi.org/10.1177/00346446231164167.
Morgenstern G, Becker C. Race and Subprime Lending Frequency: Understanding Subprime Lending's Role in the St. Louis Vacancy Crisis. Review of Black Political Economy. 2023 Jan 1;
Morgenstern, G., and C. Becker. “Race and Subprime Lending Frequency: Understanding Subprime Lending's Role in the St. Louis Vacancy Crisis.” Review of Black Political Economy, Jan. 2023. Scopus, doi:10.1177/00346446231164167.
Morgenstern G, Becker C. Race and Subprime Lending Frequency: Understanding Subprime Lending's Role in the St. Louis Vacancy Crisis. Review of Black Political Economy. 2023 Jan 1;
Journal cover image

Published In

Review of Black Political Economy

DOI

EISSN

1936-4814

ISSN

0034-6446

Publication Date

January 1, 2023

Related Subject Headings

  • Economics
  • 1402 Applied Economics