NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Is the FHA Creating Sustainable Homeownership?

Andrew Caplin, Anna Cororaton, Joseph Tracy

NBER Working Paper No. 18190
Issued in June 2012
NBER Program(s):   PE

We produce first results on the sustainability of homeownership for recent (2007-2009) FHA-insured borrowers. More than 15 percent of these borrowers have already been 90 days or more delinquent, while less than 7 percent have completed their graduation to sustainable homeownership by finally paying off all FHA mortgages. We project that the proportion who have been 90 days or more delinquent will rise above 30 percent within five years, while fewer than 15 percent will have completed their graduation to sustainable homeownership. We show that the FHA uses an outmoded econometric model that leads it to underestimate delinquency risk to borrowers and financial risks to taxpayers. Fannie Mae and Freddie Mac use this same outmoded model. More accurate estimates would serve the cause of transparency and help policy-makers to determine these organizations' appropriate roles in the U.S. housing finance markets of the future.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w18190

Users who downloaded this paper also downloaded these:
Aragon, Caplin, Chopra, Leahy, LeCun, Scoffier, and Tracy w15802 Reassessing FHA Risk
Agarwal, Amromin, Ben-David, Chomsisengphet, Piskorski, and Seru w18311 Policy Intervention in Debt Renegotiation: Evidence from the Home Affordable Modification Program
Korteweg and Sorensen w17882 Estimating Loan-to-Value and Foreclosure Behavior
Gyourko and Tracy w18880 Unemloyment and Unobserved Credit Risk in the FHA Single Family Mortgage Insurance Fund
Bayer, Casey, Ferreira, and McMillan w18069 Estimating Racial Price Differentials in the Housing Market
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

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

Contact Us