This paper focuses on two major issues. First, it focuses on potential disparities in subprime lending that are not explained by borrowers’ financial qualifications or housing market characteristics. Then, the paper turns its attention to the impact of such lending disparities, among other factors, on foreclosure outcomes. The study is limited to mortgages originated in the Washington, DC, metropolitan statistical area between 2004 and 2007, while tracking the life of each mortgage through the end of 2008. This paper provides a detailed exploration of mortgage lending practices across minority communities in the DC MSA, and looks at the performance of these loans at a deeper level than is possible with Home Mortgage Disclosure Act (HMDA) data alone. The study combines loan terms and performance information from a database obtained from a proprietary source, Lender Processing Services (LPS), Inc., together with HMDA data.
