Effects of Federal Housing Administration (FHA) Activity in Older, Urban, Declining Areas: A Review of Existing, Related Analysis

摘要

This first - stage evaluation report reviews the current state of knowledge of the effects of Federal Housing Administration (FHA) mortgage insurance activities in declining neighborhoods. It focuses on the direct and indirect effects of Section 223(e) of the Housing and Urban Development Act (1968) and other FHA mortgage insurance activities in declining areas. A chronological survey of FHA activity in older, declining urban areas is presented, followed by an analysis of the effects of FHA on the mortgage market, using George von Furstenberg's study of default determination. Using a simple model of the supply and demand for housing in a neighborhood, the paper then discusses four case studies of the effects of FHA activity in Baltimore, Md.; Chicago, Ill.; Philadelphia, Pa.; and St. Louis, Mo. Finally, Richard Muth's analysis of the effects of FHA activities on urban residential land use and the distribution of population is reviewed. The report notes that FHA activities in older central city areas began to increase in 1965; this increase was followed by a rising default and loss rate to which FHA responded with an increase in both property and mortgagor standards. Since 1971, there has been a decline in the volume of new insurance under 223(e) but continuing losses from existing insurance. It is through the interaction of FHA financing with the anticipations of buyers, sellers, and lenders that FHA policy had its greatest impact. Neighborhood change may approach a stable equilibrium as a neighborhood filters down to a lower income and racial class, or it may decline. Footnotes and graphs are supplied.