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From Residential Segregation to Social Disorder: A Multilevel Analysis of the Neighborhood Effects of Subprime Lending on Homeownership and Neighborhood Quality Author: Raymond Massenburg Dissertation School: University of Illinois at Chicago Pages: 56 Publication Date: 12/2003 Availability: Access Number: 5004 Abstract: The purpose of this study is to show the neighborhood level effects of subprime mortgage lending on social cohesion, social control, and social disorder. Many scholars have studied racial disparities between denial rates for minorities and non-minorities. According to the racial disparity scholars, minorities have been closing the homeownership disparity gap. There is evidence that this phenomenon is a result of subprime mortgage loans. Subprime mortgage loans are designed for borrowers who pose a higher credit risk. They usually include both higher closing costs and higher interest rates. While these types of loans provide homeownership opportunities to individuals who would otherwise be ineligible, some scholars have recognized that many of these mortgages default at a much higher rate. Studies have revealed that subprime loans default more than 800 percent more than prime loans. If one were to account for the fact that many of these loans are concentrated in low-income and minority communities, the issue becomes even more problematic. This is especially true in Chicago. While foreclosures have a devastating impact on the individuals and families who are forced to leave their homes, there is evidence that there are some very devastating impacts on communities and neighborhoods as well. |
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