Richard Green’s testimony on how to work through foreclosures

My wonderful colleague, Richard Green, testified in front of the Senate Banking Committee. He’s convinced me, and I’ve been a bit dubious about bailing out homeowners (still: why didn’t we make the banks refinance when we were handing the banks money with TARP? I don’t get it). Here’s my favorite part of the testimony

There are those who argue that it was the attempt to advance
mortgage credit to minorities that led to our current condition—
I do not accept that argument. The loans that have performed
most poorly were originated by institutions that were not
covered by the Community Reinvestment Act or the Affordable
Housing Goals. Moreover, as Mr. Wallison himself once noted,
Fannie Mae and Freddie Mac did not do a good job of advancing
credit to minorities or low-income neighborhoods. While this is
to their discredit, it undermines the argument that their
troubles arose because they made too many loans to underserved


Ignoring the foreclosure crisis?

This quote was made before the Wall Street decided its fanny was on fire, but I was thinking about the same thing the other day. From Christopher Hayes at the Nation:

And yet, astonishingly, four years later this lesson has gone almost entirely unheeded. Our governing institutions responded with nearly unprecedented swiftness and force to save, and then revive, the pillars of the prime economy—the banks and corporate America. Yet they are leaving the subprime economy to fend for itself, to suffer through the worst privation in seventy years. “If your personal wealth is predominantly in capital markets,” says Damon Silvers, a lawyer at the AFL-CIO who served on the TARP Congressional Oversight Panel, “well, then, you had a hell of a scare, but you’re 70 percent of the way back to where you were in 2007. If your personal wealth is predominantly in your home, you’re fucked. And approximately 80 percent of people in the US, their only asset is in their home.”

Newspaper representations of gentrification

The Journal of Urban Affairs has a nice new issue out, with plenty of papers worth reading. This was my pick for this morning:


It’s secured, I’m sorry to say, as it’s an academic journal. I didn’t have much luck finding a pdf, but I also didn’t try that hard, either. If you find one, send a blogger a head’s up, please. From the abstract:

 This study indicates that newspaper coverage of gentrification is far more diverse than the gentrification literature predicts. Our analysis of 4,445 articles published between 1986 and 2006 in nine papers in seven U.S. cities with a population of one million or greater suggests that newspaper frames of gentrification range from those that are wholly supportive of gentrification to those that are strictly critical. Papers also regularly publish accounts of gentrification that reference both its perceived “costs” and “benefits.” We find that coverage changes over time and that newspaper frames vary in relation to depictions of place characteristics, gentrifiers, and long-timers. As a result, this paper addresses questions in the gentrification literature about the content and tone of representations of gentrification, speaks to urban studies scholarship on culture’s role in urban change processes, and reveals the mutability of the meaning and use of the term “gentrification.” Finally, it serves as a call for further studies of representations of gentrification, as well as future analyses of their influence.

A couple concerns: they use a text mining method for drawing articles, but they don’t really describe how they derived their list of key words that are meant to convey different sentiments. They cover this issue in their discussion of frame mapping, citing recent research on the issues in computer-aided frame mapping. That said, it’s probably safe to assume that ‘yuppie’ indicates something negative. This is their list of words:



affordable housing

There’s the problem we always face in using computer-aided searching: why stop with yuppie and not include all its variants? Yuppified, yuppification, etc.

However, the authors don’t stop with computer coding, and that’s to great benefit for the study. They hand-code the themes in the articles to the costs and benefits associated with gentrification, primarily, it seems, from the material that journalists have quoted from current neighborhood residents.

They find:

Nearly 37% of sample articles singularly criticize gentrification. Another one-third offers more than one perspective, pointing to risks and benefits. A total of 17.4% are unabashedly supportive of gentrification, and 12.9% neutral.15 Below, we explore how frame deployment changes over time before documenting images of places and their residents associated with each frame.

The part about the study I really get interested in here concerns how sentiment changes over the course of gentrification.

They find that at the early stages, sentiment is generally positive. They use an example from an NYT article:

“At… a sumptuously decorated cafe that opened last May. . . [a barista] froths milk for cappuccinos and serves delicate salads. . . The frenetic about-face that transformed Alphabet City from a drug-infested no man’s land to the epicenter of downtown cool hasn’t quite made it to Avenue D, and some predict it never will” (Bleyer, 2005).

So it’s a story about redemption at the beginning. Then, as the gentrification occurs, the tone changes to more critical as existing residents perceive their displacement from the new services:

“‘I’ve tried to give people a reason and a reward to buy in the city and to fix up their homes—and this [recent property tax hikes] just whacks them for it. It’s government-driven gentrification, and it’s just plain wrong’” (Geringer, 2002)

Now, we could dispute that statement as being negative regarding gentrification in general, or government-driven gentrification. That is, in reading that, I am less convinced that it’s a complaint about gentrification per se, or whether it’s a complaint about taxation.

The authors argue that as gentrification nears completion, the inevitability of it begins to allay negative comment.

There’s a lot in this manuscript that makes you think, so go read if you can–a real contribution.

Visualizing the Bubble

Decision Science News has a wonderful graphic on visualizing the housing bubble, using the Standard and Poor numbers. This is a really data-rich graphic, one of those that is both simple yet complex, and you can spend a lot of time thinking about what the different trajectories mean in terms of the extent and timing of the bubble. This is their first graphic–go to the website and read the rest of the presentation. A second, cleaner graphic calls out the ‘exceptional’ stories–a good way to build a narrative with graphics: first show the whole picture, then select what people should take away.

I’d like to know more about the bounce at the end of those numbers; every city gets higher, then crashes, then (for most, not all), there’s a bounce, then another fall.

Voila Capture11

The graphic was made with ggplot2, one of my favorite new toys for R.

Mortgage foreclosures in low-income and minority communities: Carolina Reid, Researcher from the San Francisco Fed

USC’s marvelous Lusk Center sponsored a terrific talk from Carolina Reid, researcher at the San Francisco Fed. Some of her papers can be found here.

The takeaway: there is pretty good evidence from her foreclosure data, which she matched with HMDA data, that mortgage channel really affected the outcomes of high-cost loans for low-income and minority residents. She finds a strong and persistent effect of race on foreclosures, and then using both interviews and logistic regression, traces the differences in high cost loan usage by rates to the channel. Banks covered under Community Reinvestment Act requirements originated loans that were, for the most part, much lower cost to the borrower than ones that originated among mortgage brokers.

However–and this was a point that I think comes through very clearly—the mortgage brokers were more effective at outreach–unfortunately. For a cluster of her respondents in Oakland, almost all had originated their loans with a mortgage broker they knew from their church. In Stockton, many were able to use brokers they met on-site—but who spoke Spanish.

The importance of social networks here does not decline. Even with a house in foreclosure, the mortgage holders appear to be faulting the banks rather than the brokers.

It’s the question of outreach that interests me. If you are from a low-income background where your parents do not own a home, it’s hard to understand what is going on in the mortgage market. Mortgage brokers could be a positive force in these communities if they come from those communities–and were trained and licensed more thoroughly. The goal, I’m thinking, should be to help increase the “pipeline” and “pathways” to better credit and financial management–and then step into home ownership.

Rather than the narrative we have now, which appears to be “Those black and brown people couldn’t handle credit and caused the mortgage market collapse.” Um, no. Maybe they shouldn’t have taken the loans they did, but there was plenty broken about the system that didn’t involve them.

There is good evidence that suggests families can benefit tremendously from home ownership under the right conditions. Those condition preclude an unregulated feeding frenzy on secondary market right along with more and better up-front counseling.

Obama’s budgets, HSR, and Who is Going to Lose their Jobs

The New York Times has in recent years begun presenting presidential budgets in interactive treemaps, and I think the presentation is really helpful and clear.

In transportation, all the funds fare well. Despite all the durm and strang, highways continue to capture a very large portion of the budget by either absolute or per person measures.

The big moves are obviously $5b for an infrastructure bank and the $8b for Federal Railroad Association, where Amtrack funds will get rolled into the Federal commitment to HSR, yielding a 53,000 percent increase for the FRA.

We’ll see how it all fares in the Congress.

In other HSR news, Governor Rick Scott joined the governors who have rejected the HSR proposal based largely on the trillion-dollar deficit. HT to Gabriel Rossman for that link.

Is Governor Scott wrong or right? (I have trouble remember it’s Governor Scott not Governor Rick.)

Anyhoozy. Let’s go back to the NYT Treemap again and see what’s what: who lost money, and how much debt is eating our lunch:

Budgetary losers:

The National Endowment for the Arts (-13.1 % on an already small budget)

The National Endowment for the Humanities (also -13.1 % on an already small budget)

The Small Business Administration loses nearly half its already small budget (-44 %)

The Environmental Protection Agency loses 13 percent of its $9 billion budget. Compared to the billions thrown at HUD($37B), I’m rather appalled at this.

Nonetheless, Community Planning and Development loses 5 percent of its budget.

The Office of Vocational and Adult Education loses -17 percent.

Employment and Training Administration loses half of its budget. Half.

He proposes to cut the IRS budget by nearly a quarter, which is wonderful wonderful wonderful news because that allows for even more tax evasion than we currently have. This? This is sucking up to the Republicans to show how the White House is reaching across the aisle.

The interest on the public debt? It’s doing well. It’s up by 15 percent, to $470 billion (more than all the programs I just listed above) and about $4000 per person.

I’m thinking people are going to be losing work with all these cuts.

Ah, but all this HSR will create jobs jobs jobs! Investment you know. Education? Pshaw! We all know human capital is a complete waste on the job front.

The Office of Federal Student Aid gets a nice big bump, at least–51 percent. The statement is clear: kids going to college will have to borrow more and pay more ultimately for college, but the costs of borrowing will be lower.

I am not sure what the distributional consequences are of the education cuts, but I have a suspicion. And it’s not progressive, even though federal student aid is.

I personally do not value HSR more than I value the NEA, the NEH, the EPA, or education for adult learners—often the US’s most economically disadvantaged learners. What do you value?