Government Litigation Risk and the Decline in Low-Income Mortgage Lending

The Institute for Research on Poverty hosts seminars on the UW-Madison campus most Thursdays during the academic year. These presentations are free and open to the public. Room 8417.

media release: Lecture by Erik Mayer, assistant professor, Department of Finance, Investment and Banking, University of Wisconsin–Madison

In the wake of the 2008 Financial Crisis, the Department of Justice brought lawsuits against many large mortgage lenders for alleged fraud in the Federal Housing Administration (FHA) mortgage insurance program. The lawsuits led to over $5 billion in settlements and caused targeted banks and their peers to precipitously exit the FHA mortgage market. The FHA program has historically been a major source of credit for first-time and lower-income homebuyers. This presentation examines the effect of the DOJ lawsuits on FHA mortgage lending and lower-income households’ access to credit.