May 13, 2009

Pew Hispanic Center on minority mortgage meltdown

In "Through Boom and Bust: Minorities, Immigration, and Homeownership," The Pew Hispanic Center has run an interesting (but not terribly well specified) multiple regression analysis of foreclosure rates by county. The reports says, "foreclosure statistics by race, ethnicity or nativity are currently not available. However, the relationship between demography and foreclosure activity at the county level is discerned in this report through the marriage of different sources of data."

Here are the last two paragraphs of the Pew report:
Of the several demographic attributes included in the analysis, the immigrant share of the county population is the one that emerges as the most important correlate with the foreclosure rate. And within the immigrant population, the share of foreign-born Latinos stands out as a more notable influence than the share of non-Hispanic immigrants (Appendix Table A5). This may mean exactly what it appears to be—the foreclosure rate among the immigrant population, especially immigrant Latinos, is higher than average.

However, it is also possible that the presence of immigrants serves merely as a stand-in for underlying circumstances not otherwise captured in the data. In recent years, the construction boom attracted immigrants in large numbers into new settlements in the U.S. (Kochhar, Suro and Tafoya, 2005; Frey, Berube, Singer and Wilson, 2009) Many of these areas, such as those surrounding Las Vegas and Atlanta are now witnessing sharp reversals in construction and high rates of foreclosures. The increased presence of immigrants in an area may simply signal the effects of a boom-and-bust cycle that has raised foreclosure rates for all residents there. Thus, it is not possible to affirm that immigration levels in and of themselves raise foreclosure rates.

But, it sure isn't possible from their data to disprove it!

Focusing purely on immigrants (rather than on, say, minorities) is a bit of a red herring. And there is no reason to use some of the Home Mortgage Disclosure Act database on lending by ethnicity without using the meat of it -- the mortgage dollars going to different ethnic groups.

I'm working with a sociologist on a more sophisticated analysis of the data. But, Pew has given us a decent first try.

My published articles are archived at iSteve.com -- Steve Sailer

23 comments:

Anonymous said...

This begs the question of what distinguishes Hispanic immigrants from immigrants generally. In this context, mortgage default rates, it's that in much larger numbers they can and do reverse their immigrant status -- i.e. pick-up and go home, leaving their creditors holding the bag.

Now that all the rationalizing "American Dream" happy horse-shit has come a cropper, reality, a sad story of hundreds of billions in losses for investors and the public to whom much are being transferred, intrudes.

One of the greatest lies of the housing crash and burn was that it was unforeseeable. This is especially so with this particular aspect. At its root this is -- should have been -- a droning, rationally understood and handled factor in underwriting risk assessment. Recent immigrants present a greater risk of default, even if only in terms of their confirmed record of capacity and credit history. With Latin American immigrants in particular but not exclusively, you don't have to be a rocket scientist to recognize the added risk that they'll simply "walk away" -- far away.

Anonymous said...

you don't have to be a rocket scientist to recognize the added risk that they'll simply "walk away" -- far away.

True, you need to be PC-compliant or a thought-bully.

Woody said...

you need to be PC-compliant or a thought-bully.Thought-bullies once stole my imaginary lunch money, but I got them back ... in my dreams.

(WTF are you talking about?)

Marc B said...

I'd be interested in the percentage of illegal immigrants of Mexican or Central American origin accounted for in the foreclosures in this report. It is factually inaccurate to call a person illegally entering your country an immigrant unless you put the word illegal in front of it. It does a disservice to all Hispanic immigrants to be lumped into the same category as illegal aliens. A legal immigrant has a validated identity that they are unable to drop it and get another one when it becomes inconvenient.

beowulf said...

Umm, most immigrants (well, "most" is probably the wrong word), non-Hispanic immigrants only get to fly her if Uncle Sam lets them in. Hispanic immigrants just let themselves in. So there's no education requirements, criminal record check, physical exams or sponsoring citizen-- just WSJ editorial page capitalism in its rawest form.

Beyond that-- and I can't prove this-- I suspect people using stolen identities have a below average motivation to keep up a decent credit score.

RKU said...

Frankly, I'm really, really *really* skeptical that any significant fraction of the $300K+ or whatever home mortgages actually went to illegal immigrants. Does anyone actually believe that all those sub-minimum wage nannies or illegal day laborers hanging outside Home Depot were buying expensive houses, sub-prime loans notwithstanding?

The whole thing smells like an Urban Legend to me, one or two exceptional anecdotes aside. Where's the evidence---any evidence?

Anonymous said...

Thought-bullies once stole my imaginary lunch money, but I got them back ... in my dreams.

Brilliant, lol!

Cielo Azul said...

Look, Steve, what is important here is that arch "conservative" Matt Drudge has this headline up on his extremely influential web site right now:

Census: Declining immigration slows Asian, Hispanic growth... Developing...

So all of you xenophobes can relax now. Yes, thirty million or so illegals have jumped the borders in the last fifteen years but two or three million either have gone home already or plan to go home in the future! So there is no reason to be alarmed.

Now, in the tradition of Stephen Jay Gould, repeat the following three times every morning:

Just because the Latin-flooded "Sand States" are now dragging the USA into national bankruptcy and California hasn't had a AAA credit rating since 1986 (the year of the Reagan Amnesty), that doesn't mean that Latinization is a negative outcome for America.

Just because the Latin-flooded "Sand States" are now dragging the USA into national bankruptcy and California hasn't had a AAA credit rating since 1986 (the year of the Reagan Amnesty), that doesn't mean that Latinization is a negative outcome for America.

Just because the Latin-flooded "Sand States" are now dragging the USA into national bankruptcy and California hasn't had a AAA credit rating since 1986 (the year of the Reagan Amnesty), that doesn't mean that Latinization is a negative outcome for America.

California State Treasurer Bill Lockyear has the skinny

And the hits just keep on coming:

California Credit Rating Lowest in U.S.

Anonymous said...

"Does anyone actually believe that all those sub-minimum wage nannies or illegal day laborers hanging outside Home Depot were buying expensive houses, sub-prime loans notwithstanding?"

Depends on what you call "buying".

In the Northern VA suburbs, what was going on was basically this: A house got sold and as soon as the new owners moved in, the neighbors discovered that the single-family house (SFH) that had formerly housed a single family or a couple now housed several adults and several children and was more like a boarding house than a SFH.

It became obvious that the house had been sold to "somebody" who had to combine several incomes and/or take in renters in order to afford to live there. I strongly suspect that whoever was supposed to check out the buyers simply took their word that they made whatever it took to qualify or even told them what to put down as income. I also suspect that the "buyers" listed on the loans were largely legal. But what about all those other people living there? Who were they?

The Washington Post, in its never ending efforts to advance amnesty, wrote several articles mentioning "mixed families", meaning "families" with both legal and illegal members. Apparently this was common. At least one county in NoVA was so badly hit that it instituted a crack-down, checking the status of people who got arrested, etc. Even before the worst of the housing market collapse and thus the end of construction related jobs, the number of Hispanics in the county droppped. The neighboring counties saw a large jump in ESL students in K-12.

When the housing collapse dried up jobs and the general economy went south, all those "others" couldn't help pay the mortgage, which had been adjusted upwards anyway, even if the legal buyers still had jobs.

The NoVA areas hardest hit by the foreclosures etc are the ones that were previously over-crowded.

Naturally the neighbors screamed bloody murder from the beginning and contined while all of this was going on. They were called xenophobic racists by the people who didn't live in those areas. They had to be xenophobic racists, didn't they because what could possibly go wrong with a "buyer" needing 6 or more incomes to pay his mortgage?

flenser said...

Does anyone actually believe that all those sub-minimum wage nannies or illegal day laborers hanging outside Home Depot were buying expensive houses, sub-prime loans notwithstanding?


Yes. There are entire towns in America, and in my own neck of the woods, where the majority of the inhabitants are illegals. And many drive nice cars and live in nice houses. You are kidding yourself badly if you think that these people are making "sub minimum wage". Once you factor in the lack of paying taxes plus the WIC checks, they are probably making the median American household income.

Where's the evidence---any evidence?


Steve has been shoving the evidence in front of your face for at least a year now. Perhaps you require not evidence, but proof?

Anonymous said...

Does anyone actually believe that all those sub-minimum wage nannies or illegal day laborers hanging outside Home Depot were buying expensive houses, sub-prime loans notwithstanding?


Yes. There are entire towns in America, and in my own neck of the woods, where the majority of the inhabitants are illegals. And many drive nice cars and live in nice houses. You are kidding yourself badly if you think that these people are making "sub minimum wage". Once you factor in the lack of paying taxes plus the WIC checks, they are probably making the median American household income.

Where's the evidence---any evidence?


Steve has been shoving the evidence in front of your face for at least a year now. Perhaps you require not evidence, but proof?

Lucius Vorenus said...

flenser: Once you factor in the lack of paying taxes plus the WIC checks, they are probably making the median American household income.

Almost exactly two years ago, at the height of the last amnesty/decriminalization go-round, Robert E. Rector, at Heritage, calculated that the US taxpayers were already subsidizing them to the tune of $19,588 per family per year.

So if, on top of that, El Padre could mow about 400 lawns per year, at $50 per lawn, in a 100% cash economy, with 0% going to the IRS, then El Familia would be netting upwards of $40,000 per year.

RKU said...

In the Northern VA suburbs, what was going on was basically this: A house got sold and as soon as the new owners moved in, the neighbors discovered that the single-family house (SFH) that had formerly housed a single family or a couple now housed several adults and several children and was more like a boarding house than a SFH.

It became obvious that the house had been sold to "somebody" who had to combine several incomes and/or take in renters in order to afford to live there. I strongly suspect that whoever was supposed to check out the buyers simply took their word that they made whatever it took to qualify or even told them what to put down as income. I also suspect that the "buyers" listed on the loans were largely legal. But what about all those other people living there? Who were they?
---Now we're finally talking some sense!

I wouldn't be surprised if a pretty sizable fraction of the recently defaulted mortgages were exactly in this sort of category, being bought by someone---probably a speculator---who claimed to be an owner-occupier to get the loan, but then turned it into a "rental dorm" to pay the mortgage while he waited to flip it.

Look, it's obvious that all the illegal day-laborers were living *somewhere*, and the cheapest housing was probably sharing the rent on a speculator's property.

But there's a huge difference between saying day-laborers were paying 1/15 of a house's monthly rent, and claiming that they were actually buying the houses themselves.

Lucius Vorenus said...

Cielo Azul: ...California hasn't had a AAA credit rating since 1986...

Dude, The Anointed ├śne inserted language into the Porkulus Bill which FORBIDS the states from cutting their budgets to bring them into balance:

If state cuts too deep, it loses stimulus funds
Thursday, May 14, 2009
Matthew Yi, Chronicle Sacramento Bureau
sfgate.com

...closing a deficit for the fiscal year beginning July 1 that ranges between $15.4 billion and $21.3 billion has become much more complicated because of Washington's requirement that states maintain a minimum level of spending and services in exchange for stimulus funds...

But hey, it gets even better than that!

America's triple A rating is at risk
By David Walker
Published: May 12 2009 20:06
ft.com

Long before the current financial crisis, nearly two years ago, a little-noticed cloud darkened the horizon for the US government. It was ignored. But now that shadow, in the form of a warning from a top credit rating agency that the nation risked losing its triple A rating if it did not start putting its finances in order, is coming back to haunt us.

That warning from Moody's focused on the exploding healthcare and Social Security costs that threaten to engulf the federal government in debt over coming decades. The facts show we're in even worse shape now, and there are signs that confidence in America's ability to control its finances is eroding...


Mechanic: Somebody set up us the bomb.

CATS: All your base are belong to us.
CATS: You are on the way to destruction.
CATS: You have no chance to survive make your time.

MOO HA HA HA HA HA HA!!!

Anonymous said...

Was it just me, or was all of Google down earlier today?

Anonymous said...

Frankly, I'm really, really *really* skeptical that any significant fraction of the $300K+ or whatever home mortgages actually went to illegal immigrants. I bet you are also "really really skeptical" that any significant fraction of the crime in the US is committed by illegal immigrants [and Hispanics in general].

Or that any significant proportion of welfare dollars goes to them.

Or that any significant portion of income inequality and consequent agitation for socialism is due to their presence.

You are skeptical because they are so demographically insignificant, right?

Yet I bet you are ALSO "really, really" skeptical of any electoral strategy that ignores Hispanics, because they are so demographically important!

Funny how that works. Hispanics are variously tiny minorities or oncoming juggernauts as it suits their purposes.

Ronduck said...

RKU said...

But there's a huge difference between saying day-laborers were paying 1/15 of a house's monthly rent, and claiming that they were actually buying the houses themselves.

Not all illegals are day laborers. After several years in the country, and especially after giving birth to an anchor baby or two many of these people have moved up to the point where they may be earning 20k, and often much more if they are working in construction. Second, Hispanics tend to have very large extended families, which would include a mix of illegals, grown anchor babies and second generation children. These extended families can be used to purchase a home for thirteen people that was only designed for four or five.

Anonymous said...

RKU,

I don't question for a second that the houses that had 15-20 day laborers were owned by speculators. It's doubtful that a single day laborer bought it and then rented out to 19 more of same. However, many, many houses in NoVA were occupied by several families often with a few single men in the mix.

Now in everything I have read - and I've read a lot - about the housing meltdown, I don't recall banks making mortgages to 6 or more people. I still suggest that a lot of these multi-family plus renters houses were situations with no down-payment, "liars loans" mortgages made to a couple - probably usually legal - who then brought in "family" - some legal, some illegal - to help pay the expenses, which became astronomical in time.

Remember, during the run-up before the housing bubble popped, AMNESTY was in the air. It was expected to pass. No problem to have a bunch of illegal "cousins" living with you because they'd soon be made legal anyway.

Anonymous said...

But there's a huge difference between saying day-laborers were paying 1/15 of a house's monthly rent, and claiming that they were actually buying the houses themselves.


I suppose that very few day-laborers were buying houses. But why on earth are you kidding yourself into thinking that Americas 30 million illegals are made up of day-laborers? Let alone that said day laborers are making sub-minimum wage?

Nanonymous said...

I'm working with a sociologist on a more sophisticated analysis of the data Probably La Griffe du Lion then?

Roger Chaillet said...

Does RKU know what he's talking about?

I sold new homes around Dallas - Fort Worth for a few years. I do know what I'm talking about.

I remember one Mexican family came to my new model home in an old cotton town south of Dallas. I had to pre-qualify such families before showing them the model homes. So, we sat down in an office in the adjacent showroom and got down to business.

The Mexican father spoke no English - zero, zip, zilch, nada. He was bouncing a baby in his lap while his pre-schooler interpreted for him.

I was trying to pre-qualify him for a loan from our captive mortgage company, and he had no clue as to what the hell I was talking about!

Gee, imagine that! By law you are supposed to speak English before immigrating to this banana republic.

In another instance a family of 8 Hispanics wanted to buy a small, three bedroom home. Three generations were to live in it including the daughter with her obligatory bastard child. The father made so little income that another teenage daughter was going to help out with the mortgage. The home's living space was under 1600 square feet.

Needless to say they didn't qualify.

And let's not forget my brief stint in the mortgage business. This occurred after selling homes. A Hispanic family from near Corpus Christi wanted to re-finance a single family mortgage.

The family faxed me tax returns showing an income of just over $3,000 a month. Their mortgage alone not including monthly expenses was almost $2,000. This was for a home worth approximately $230,000. The father of the family of four barely spoke English, yet he had allegedly been in the US for almost 15 years. He "earned" so little money with his contracting business that he received earned income credits for his two daughters.

Such are the joys of a cash economy and 1099 income.

Now do you understand?

RKU said...

Does RKU know what he's talking about?

I sold new homes around Dallas - Fort Worth for a few years. I do know what I'm talking about.


WOW!!!

Dallas-Fort Worth is one of the most heavily Latino immigrant regions in the United States.

And during "a few years" selling new homes there, our friend can cite just TWO examples of (very likely) illegal immigrants trying to buy homes, of which only ONE actually qualified for the loan and completed the transaction.

Somebody really needs a refresher course in statistics, or maybe just simple arithmetic.

My own guess is that as of 2008, less than 1% of American mortgages were held by illegal immigrants, and just a small fraction of 1% of those mortgages over $300K.

The anecdotal evidence of our Texas friend certainly seems consistent with this.

Anonymous said...

Does RKU know what he's talking about?


I think we can safely conclude ... no, based on his non-responsive responses to everything that has been said to him.