Jacob S. Rugh|Douglas S. Massey
Racial Segregation and the American Foreclosure Crisis
Princeton University|Princeton University
rise subprime lending ensuing wave foreclosures partly result market forces wellidentified literature also highly racialized process argue residential segregation created unique niche minority clients differentially marketed risky subprime loans great demand use mortgagebacked securities could sold secondary markets test argument regressing foreclosure actions top 100 us metropolitan areas measures black hispanic asian segregation controlling variety housing market conditions including average creditworthiness extent coverage community reinvestment act degree zoning regulation overall rate subprime lending find black residential dissimilarity spatial isolation powerful predictors foreclosures across us metropolitan areas isolate subprime lending causal mechanism segregation influences foreclosures estimate twostage least squares model confirms causal effect black segregation number rate foreclosures across metropolitan areas thus conclude segregation important contributing cause foreclosure crisis along overbuilding risky lending practices lax regulation bursting housing price bubble