Subprime Mortgages: What, Where, and to Whom?

Christopher J. Mayer, Karen Pence

NBER Working Paper No. 14083
Issued in June 2008
NBER Program(s):   AP   CF   PE

We explore the types of data used to characterize risky subprime lending and consider the geographic dispersion of subprime lending. First, we describe the strengths and weaknesses of three different datasets on subprime mortgages using information from LoanPerformance, HUD, and HMDA. These datasets embody different definitions of subprime mortgages. We show that estimates of the number of subprime originations are somewhat sensitive to which types of mortgages are categorized as subprime. Second, we describe what parts of the country and what sorts of neighborhoods had more subprime originations in 2005, and how these patterns differed for purchase and refinance mortgages. Subprime originations appear to be heavily concentrated in fast-growing parts of the country with considerable new construction, such as Florida, California, Nevada, and the Washington DC area. These locations saw house prices rise at faster-than-average rates relative to their own history and relative to the rest of the country. However, this link between construction, house prices, and subprime lending is not universal, as other markets with high house price growth such as the Northeast did not see especially high rates of subprime usage. Subprime loans were also heavily concentrated in zip codes with more residents in the moderate credit score category and more black and Hispanic residents. Areas with lower income and higher unemployment had more subprime lending, but these associations are smaller in magnitude.

download in pdf format
   (638 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14083

Users who downloaded this paper also downloaded these:
Gorton w14398 The Subprime Panic
Mian and Sufi w13936 The Consequences of Mortgage Credit Expansion: Evidence from the 2007 Mortgage Default Crisis
Goetzmann, Peng, and Yen w15334 The Subprime Crisis and House Price Appreciation
Bajari, Chu, and Park w14625 An Empirical Model of Subprime Mortgage Default From 2000 to 2007
Gorton w14358 The Panic of 2007
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us