Lucy Delgadillo

Residential Mortgage Default in Low‐ and High‐Minority Census Tracts

The purpose of this study is to examine housing, demographic, and economic characteristics of the owners in census tracts with high residential mortgage default rates. In addition to these variables, the effect of being a minority is studied. Descriptive statistics and correlations are used to profile the characteristics of the census tracts and to determine which characteristics had statistical significance with mortgage default rate as well as minority percentage. Logistic regression is conducted to create a model describing the characteristics of the census tracts that have high rates of default. The statistical model shows that census tracts with high minority concentrations might be associated with higher rate of mortgage default; however, this could be explained by the fact that census tracts with higher minority concentrations typically have more economic disadvantages, which is the real cause of default, not their minority status per se.

Borrower- and Mortgage-Related Factors Associated With FHA Foreclosures

The study identifies which household factors contribute to the likelihood of foreclosure by responding to the question: What borrower-related and mortgage-related factors are correlated with home foreclosure? Data used are from an inventory of active and foreclosed FHAhomes in Utah from the years 2000 to 2001. The sample consisted of 179 cases. The borrower-related factors included age of borrower, job tenure, self-employed, race of borrower, first-time homebuyer, number of dependents, homeownership counseling, and borrowers income. The mortgage-related factors included loan-to-value ratio, payment-to-income ratio, back-end ratio, gift amount, size of down payment, and interest rate. Results revealed that race, front-end ratio, and interest rate were statistically significant factors associated with the probability of foreclosure. The multiple interaction regression model indicated that the interaction between race and front-end ratio was statistically significant, which suggests that the effect of front-end ratio differs between Whites and non-Whites.

Financial Counseling and Financial Health

This chapter provides an overview of financial counseling practices including required skills, content, and processes. It briefly describes the type of counseling and its developmental stages. Although financial counseling has remained relatively stable over the years, new changes are coming to the housing counseling industry, including new certifications and requirements. To this end, the chapter presents a succinct history of housing counseling and specific changes from the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. In addition to new standards and competencies for housing counselors, the chapter explains the new General Ability to Pay Rules (ATP), the Qualified Mortgage Standards (QM), amendments to High-Cost Mortgages, Truth in Lending Act, and to the Real Estate Settlement Procedures Act. The chapter concludes with the idea that financial counseling and housing counseling are components of financial health.

A Case Study Demonstrating the Use of Appreciative Inquiry in a Financial Coaching Program

This article presents a case study of appreciative inquiry applied to client work within the context of a solution-focused, financial coaching program. Appreciative inquiry (AI) is a process—a generative process—wherein a client envisions, describes, and constructs a new meaning or reality through structured questions and answers, and then designs a way to get there (to their destiny). The origins, tenets, and applications of AI approach are described, followed by a case study to facilitate a clients overcoming of a specific, maladaptive money script utilizing AI. The article provides implications for financial practitioners and a foundation for future research on the effectiveness of the AI approach in financial coaching.

Spatial Analysis of Residential Mortgage Default in a Metropolitan County

Abstract In this pilot study, research was conducted to explore the application of GIS technology to residential mortgage default. The purpose of this study was to examine the relationship between foreclosure rates and neighborhood characteristics in a metropolitan county in Utah. Neighborhood was defined as a discrete spatial entity that contains households and housing structures with similar characteristics, and is equivalent to a census tract. Regression analysis indicated that characteristics such as proportion of household units with second mortgages and racial composition of census tracts explained 80% of the variance of foreclosure rates among the communities. The geo-mapping analysis of Cache County showed that foreclosure rates were spatially differentiated. Clusters of foreclosures were prominent in the southwestern portion of the county.

Financial Profile of First Time Home Buyers in Northern Utah

Abstract Using a structured survey, the purpose of this study was to identify the benefits of First Time Home Buyer Workshops in Northern Utah, identify approaches used by workshop participants to locate and purchase a home, identify types of mortgage loans used by new homeowners, and build and test an empirical model of financial stability among new homeowners. The results of this research show that more than one half of the participants were experiencing some kind of financial strain at least in the short term, as measured by a financial index. Many first time home buyers were applying up to 50% of their income to their regular mortgage payments and had no savings to cover maintenance, emergencies, or repair costs for their newly purchased homes.

A Model of Factors Correlated to Homeownership: The Case of Utah

This article examines the relationship between homeownership and socioeconomic, demographic, and market factors in Utah. Units of analyses were census-designated places. The goal was to provide a model that can be replicated by housing specialists and consumer scientists to gain a better understanding of how homeownership (dependent variable) differs from place to place and how this variation relates to socioeconomic index, population density, affordability ratio, and the median value of owner occupied housing units (independent variables). The 1990 data set was analyzed using bivariate and multivariate analyses. Homeownership percentages were regressed on the linear combination of the socioeconomic scale, log of population density, and affordability ratios. Log of population density was the factor that explained most of the variance. The interaction equation slightly improved the explanatory power, accounting for more than 50% of the variance.

Perceived Financial Costs and Neighborhood Effect of Foreclosures by Next-Door Neighbors in USDA Rural Areas

Abstract Many studies on foreclosures have collected information on individuals or families who experience foreclosure. Other studies have computed actual costs of foreclosure instead of the perception of foreclosure costs. Others have used aggregate data on foreclosed homes, as their unit of analysis. But no single study found has looked at the perceived financial cost and neighborhood effect of a foreclosed home in rural areas, neither have they used the next-door neighbors as the unit of analysis. This study fills this gap in knowledge by investigating how the next-door homeowners perceive financial and neighborhood changes because of their adjacent foreclosed home. The study used a financial and social scale as well as perceptions of foreclosures in general and about their neighbors’ foreclosure in particular to answer the research questions. An additional uniqueness of this study is that it was conducted in USDA rural designated areas.

Narrative Experiences of USDA Section 502 Direct Loan Borrowers

Abstract The government has invested substantial time and money in encouraging homeownership, and, over the last 30 years, in directly encouraging homeownership among lower-income households. Despite these efforts, the impact and satisfaction of the U. S. Department of Agriculture Section 502 Mutual Self Help Housing Loan Program (MSHP) borrowers remains largely unstudied. This study contributes to the existing literature by directly assessing the satisfaction of MSHP participants in Utah. This is qualitative research interested in capturing in-depth information about the challenges, benefits, and shortcomings of the program; skills learned by the participants in the process of building their home; and recommendations to improve the program. Five main themes emerged from the data: 1) participants were given access to homes that were previously unaffordable, 2) the program increased human capital, 3) the program increased social capital, 4) the program had some weaknesses, and 5) participants believed the process was difficult, but altogether worth it.

Establishing a Link Between Subprime Lending,Payday Lending and Housing Costs

Abstract This study identified counties with high shares of payday businesses and high shares of subprime loans. Payday lending establishments, banks, and credit unions were inventoried in every county in Utah. The objective was to empirically analyze a potential link between high shares of payday lending and subprime lending, and between high shares of payday lending and housing cost burden. A statistically significant association was estimated by calculating Spearman ‘s rho on the ranking of the variables. The study found a moderately strong correlation between payday lending and subprime lending, and between payday lending and housing cost burden. The regression model showed that 30% of variability in subprime lending was accounted for by payday store-per-household and housing cost burden. Specifically, payday store-per-household alone accounted for 20% of the variation in subprime lending. Recommendations for payday lending and subprime lending were provided.