Subprime Lending and Alternative Financial Service Providers

From: HUD USER News TEST

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Current Housing Unit Damage Estimates - The Office of the
Federal Coordinator for Gulf Coast Rebuilding at the
Department of Homeland Security, in cooperation with the
Federal Emergency Management Agency, the Small Business
Administration, and the Department of Housing and Urban
Development, has compiled data to assess the full extent
of housing damage due to Hurricanes Katrina, Rita, and
Wilma. Detailed tables on the extent of damage, type of
damage, tenure, insurance status, and housing type are
provided for Alabama, Florida, Louisiana, Mississippi,
and Texas, both combined and individually. Detailed
tables are also provided for select parishes in Louisiana
(Calcasieu, Cameron, Jefferson, Orleans, Plaquemines, St.
Bernard, St. Tammany, and Vermilion), counties in
Mississippi (Hancock, Harrison, and Jackson), and each of
Orleans Parish's 14 Planning Districts. Summary damage
estimates are provided for the 136 counties across the
five states that had 10 or more housing units with
damage. A link to the damage estimates is located at
https://www.huduser.gov/publications/pdf/GulfCoast_Hsngdmgest.pdf.
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The last two decades have seen significant changes in
the consumer financial services market. The rapid growth
of both subprime mortgage lending and alternative
financial service providers (AFSPs), such as check
cashers, payday lenders, and pawnshops is increasingly
evident. Common concerns being raised with regard to
these industries include high service fees and
disproportionate targeting of low-income and minority
households. It is often argued that the growth of
higher-cost financial services in low-income and
minority communities is partly due to the absence of
banks in these areas. However, there is little research
on the extent to which these phenomena are related. This
study examines subprime lending and the prevalence of
AFSPs in low-income and minority communities.

Recently released by HUD, "Subprime Lending and
Alternative Financial Service Providers: A Literature
Review and Empirical Analysis" consists of two parts.
The first reviews the literature related to subprime
lending and AFSPs, and examines how regulation of
financial services can affect access to mortgage capital
and basic banking services in low-income and/or minority
communities, while providing an appropriate level of
consumer protection. The second part of the study is an
empirical analysis of the relationship between
neighborhood characteristics (including race-ethnicity,
income, and credit risk measures), patterns of subprime
lending, and locations of AFSPs and banks in the Dallas
metropolitan area.

The report is available as a free download at
https://www.huduser.gov/portal/publications/hsgfin/sublending.html.

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