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Washington, D.C. –Low-income homeowners with high-quality mortgages weathered the foreclosure crisis better than subprime borrowers and felt less stressed than renters, UNC Center for Community Capital researchers told participants at a Federal Reserve Board research conference April 28-29.

In addition, those who filed for bankruptcy did so mainly because of adverse life events, such a unemployment, unexpected expenses and medical bills.

These were among the findings presented at the Federal Reserve Community Affairs Research Conference, which focused this year on “The Changing Landscape of Community Development.”

The conference brought together nationally recognized experts in the fields of community development, economic revitalization and asset building. Two center researchers presented findings from research on the experience of low- and moderate-income home loan borrowers.

Center research associate Kim Manturuk’s presentation, “Perception & Reality during the Financial Crisis: Homeownership, Low-Income Households and Financial Stress,” highlighted findings from research that examined the experiences of low-income homeowners during the financial crisis and subsequent downturn.

The research showed that homeowners were not disproportionately affected by the downturn compared to renters and reported feeling less stressed or insecure during the crisis, Manturuk said. In addition, homeowners in the study had much lower foreclosure rates than subprime borrowers, in spite of their low credit scores, low incomes, high debt-to-income ratios and low downpayment.

“These findings suggest that low-income borrowers can be successful when given responsible mortgage products and that policies designed to increase access to homeownership for lower-income families remains a viable asset-building approach, even in light of the downturn,” Manturuk said.

Center research director Mark Lindblad presented findings from another center study, “Coping with Adversity:  Personal Bankruptcy Decisions of Lower-Income Homeowners Before and After Bankruptcy Reform.”

That research examined whether adverse life events influence the personal bankruptcy decisions of lower-income households. The study, designed to isolate factors that statistically predict bankruptcy, dispels the notion that personal bankruptcy is explained mostly by the financial benefits of filing rather than serious distress.

“Our findings show that respondents filed for bankruptcy not simply because it provided a financial benefit, but also to cope with stressors related to job loss and mortgage delinquencies,” Lindblad said.

Mortgage finance is a key area of focus for the UNC Center for Community Capital, the leading center for research and policy analysis on the transformative power of capital on households and communities in the United States. Part of the College of Arts and Sciences at the University of North Carolina at Chapel Hill, the center offers data and analysis that helps policymakers, advocates and the private sector find sustainable ways to expand economic opportunity to more people more effectively. For more information, visit or call (919) 843-2140.

Topics(s): Affordable Homeownership, Default, Bankruptcy, & Foreclosure, Mortgage Finance
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