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Post a Comment On: Steve Sailer: iSteve

"Foreclosure rates in California by ethnicity"

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Anonymous Fred said...

This is impressive reporting on your part, Steve. If I were the publisher of national newspaper, I'd hire you for the op/ed page in a heartbeat. A perfect fit for you would be Los Angeles-based Investor's Business Daily, with it's rightist op/ed page, except for one big problem: the IBD shares the same open-borders ideology that the WSJ and the NYT do. They should hire you anyway though.

8/6/09, 12:06 AM

Anonymous hcl said...

Sailer, I think you might comment on the LA Fitness gunmen as fit the stereotypical beta male casualty of feminism.

Here's a rather intelligent nerd, not obviously bad looking, okay-enough personality according to multiple testimonials, who runs his life well (savings, house, decent job) but can't get laid.

Should this happen?

8/6/09, 12:09 AM

Blogger Subcomandante Dave said...

Didja see this?

"NEW YORK (Reuters) – The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.

Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements."

http://news.yahoo.com/s/nm/20090805/bs_nm/us_usa_housing_deutschebank?sec=topStories&pos=1&asset=&ccode=

8/6/09, 1:41 AM

Anonymous kalew said...

Awesome riot porn from a recent autoworker strike in South Korea:

http://www.guardian.co.uk/world/gallery/2009/aug/04/south-korea-automotive-industry

8/6/09, 1:46 AM

Anonymous Anonymous said...

2 typos in the last §, Steve

8/6/09, 3:17 AM

Anonymous Anonymous said...

Good work Steve. I am suprised that there are not politicians demanding that we keep better records on where our money is going. Perhaps somebody needs to file a law suit. If the politicians feel uncomofortable demanding records of defaults by race they could simply claim they wanted to be sure that whites were not given discriminitory preference and they are just making sure they were paying their loans back to the multi-racial tax payers. (by the way, has anybody ever figured out what percentage of our taxes are paid by race? That would be an interesting read).

8/6/09, 4:41 AM

Anonymous beowulf said...

Its fun to imagine how increasingly freaked out Caroline Laderman and Elizabeth Reid became by Steve's "repeated email requests to release the unadjusted numbers by ethnicity".

8/6/09, 4:42 AM

Anonymous Anonymous said...

Also, is the Fed subject to the Freedom of Information Act?

You'll probably get this answered a dozen times but:

U.S. judge rules for Fed in Fox News Network request

The owner of the Fox Business cable network made an initial request for documents in November last year under the Freedom of Information Act (FOIA) [...]

"I rule that one document, which the Board determined is not a record, is indeed, a record. The Board shall identify this document and either produce it or claim an exemption," Hellerstein said in a written order.

"In all other respects, I grant the Board's motion and deny Fox's motion, finding that the Board performed an adequate search and that Exemption 4 permits the Board not to disclose the documents that Fox seeks."

Under Exemption 4 of the FOIA, an agency must demonstrate that the information sought is a "trade secret" or "commercial or financial" in character and "obtained from a person" and "privileged and confidential."

[...]

The case is Fox News Network LLC v Board of Governors of the Federal Reserve System 09-272 in U.S. District Court for the Southern District of New York (Manhattan)


~Svigor

8/6/09, 4:51 AM

Anonymous Halcyon_Futures said...

Steve,

Excellent post. You can make online FOIA requests here:

http://foia.state.gov/foiareq/foialetter.asp

There are 9 exemptions; you should look out for #9:

http://www.corporateservices.noaa.gov/~foia/foiaex.html

8/6/09, 5:20 AM

Anonymous Anonymous said...

Fred, you surely know Steve would be fired after his first piece, not to mention pilloried and made public enemy no.1 on national media

8/6/09, 5:40 AM

Blogger Evil Sandmich said...

Considering that Bailout Bernanke ignored Congress, the organization that is ostensibly his boss, when it came to a document request, I'd say the odds of a commoner getting anything out of the Fed with the Freedom of Information Act are slim to none.

8/6/09, 6:06 AM

Anonymous Bill said...

No way can you exactly reverse-engineer the raw difference by race. You could do a back-of-the-envelope calculation to get kinda sorta close, however, if you had enough information. You would need to know, for each variable with a coefficient much different from 1.00 in, say, Table 6 of the paper what the difference is in that variable between blacks and whites. This would be hard for most of those variables, as many of them either come from the proprietary data or are calculated by the authors. Even worse, the authors have chosen inexplicably to measure income in units which make its odds ratio 1.00 after rounding, and this completely hides the size of the income effect. This even though income is highly statistically significant.

On the FOIA question, there is a web page here: http://www.federalreserve.gov/generalinfo/FOIA/default.cfm.

One random comment on your post: you say that the authors painstakingly matched the two databases. The authors, on the other hand, say "data were matched using a probabilistic matching method." I doubt most people would consider probabilistic matching painstaking were it to be explained to them --- that usually means pushing a button to have the computer guess at matches. It certainly does NOT mean a smart, careful person looking with his eyes at the data to try to figure out the matches. This is important to your point, since it means that there is probably a fair amount of measurement error in the race, income, and other HMDA variables, and it's reasonable to believe that this biases the estimates of the effect of those variables towards 1.00 (though it does not always work this way). So the true race effect might be bigger than what is estimated in the paper.

8/6/09, 6:32 AM

Anonymous beowulf said...

Yes, you can make a Freedom of Information Act request.
http://www.federalreserve.gov/generalinfo/foia/

8/6/09, 6:39 AM

Anonymous bbartlog said...

Presumably, the raw differences in foreclosure rates are even greater.

Except for Asians. I would expect the raw difference for Asians to be smaller (or even negative).

Is the Fed subject to FOIA

Why would they be? The Fed isn't a part of the government. Ha ha.

8/6/09, 6:40 AM

Anonymous Bill said...

The authors of that paper don't seem to have a very strong handle on what their results mean, in context.

The anti-CRA argument goes something like: CRA causes increased lending to minorities, minorities are less likely to pay, therefore CRA causes more poorly performing loans.

What sense does it make to CONTROL for minority status in a regression to test that theory?

8/6/09, 6:40 AM

Anonymous CVD said...

Yes, the Fed is subject to FOIA (see here: http://www.zerohedge.com/article/federal-reserve-responds-aig-foia-request-davis-polk-and-morgan-stanley-data-forthcoming).

Good luck.

8/6/09, 7:22 AM

Anonymous Anonymous said...

I wonder whether household wealth is the hidden explanatory variable there? That would explain the big gap between Asians and Blacks/Hispanics, and the smaller gap between Asians and Whites. Not sure it would explain the Black/Hispanic gap, though (I would actually have thought Hispanics had, for equivalent income and FICO, considerably lower household wealth than Blacks, since so many more of them are recent immigrants or from immigrant families). Did the databases used for the study track household wealth statistics?

8/6/09, 7:26 AM

Blogger AMac said...

Most notably with clinical-trials research with big pharma sponsorship, we've seen cases of The Dog That Didn't Bark. Findings of lack-of-efficacy (etc.) that never got published.

Or, that saw the light of day in obscure places, in hard-to-understand formats.

So authors Laderman and Reid decline to provide you with more data.

I suspect they found interesting, unexpected things in their results, and that honesty compelled them to discuss them in print. But that the sort of attention that iSteve brings is very unwelcome.

It seems unlikely that they see this development as a net positive for their careers as Fed researchers, either.

8/6/09, 8:27 AM

Anonymous Anonymous said...

Wonderful work, as usual!

Off topic, it appears the Times has decided to allow the good Dr. Watson to partially rehabilitate himself. Perhaps the stark relief provided by Crowley's courage made them nervous. A carrot for the capitulators.

http://www.nytimes.com/2009/08/06/opinion/06watson.html?_r=1

8/6/09, 8:35 AM

Blogger spacehabitats said...

"According to Google, even though this report is eight months old, the part about the race differences in foreclosure rates has only quoted once before...

Well naturally, Steve, why would anyone care about the ethnicity of the defaulters?
Our culture is scrupulously color-blind when it comes to racial differences.
Or is that selectively color-blind.

8/6/09, 8:46 AM

Anonymous Anonymous said...

Fertility rates in rich countries on the rebound:

http://scienceblogs.com/notrocketscience/2009/08/fertility_rates_climb_back_up_in_the_most_developed_countrie.php

8/6/09, 8:47 AM

Blogger Stopped Clock said...

THis is good, but really, it means little. Liberals will just say that the mortgagors went and picked out gullible NAMs on purpose because they're all rich white Republicans who love to torture NAMs but wouldnt dream of causing trouble for poor whites in California.

8/6/09, 8:57 AM

Anonymous Anonymous said...

Curiously, "3.3 times" is exactly the ratio between black and white violent crime rates (excluding murder-- blacks commit on the order of 8 times as many murders).

I suspect both numbers are tied to the Fundamental Constant of Sociology somehow.

8/6/09, 9:16 AM

Anonymous Cambyses said...

The Fed considers itself subject to the FOIA, and offers a web page outlining that view:

http://www.federalreserve.gov/generalinfo/foia/

However, they might withhold the data you seek under (most likely) either exemption 4 or 5:

http://www.federalreserve.gov/generalinfo/foia/exemptions.cfm

If I were you I'd file an FOIA request and find out...

8/6/09, 9:21 AM

Anonymous RKU said...

Well, these are certainly interesting relative ethnic-default numbers, the first solid ones I've seen anywhere. But they hardly settle the question.

First, the overall default rates are extremely low. Remember, these are the home mortgages taken out at the absolute height of the CA Bubble, 2004-2006, and the total default rates are just 4% over 2-3 years, or maybe something like 1.5% per year. If the default rates for those mortgage-years had stayed anything like that, there never would have been a Meltdown. I think the actual default rates for this overall cohert of CA mortgages was something like 10x or more higher than that.

One problem is that for most of the period under examination, housing prices were still rising sharply, meaning that homeowners in financial trouble could just sell at a profit, avoiding any foreclosure. Presumably, that's part of the reason for the very low default rate. Maybe the relative-ethnic default rates stayed constant as the overall defaults zoomed upward, or maybe they didn't. It's hard to be sure.

Another thing which makes me suspicious of the data is that on an income-adjusted basis the Asian homeowners have default rates 60% *higher* than the white homeowners (and don't forget that a pretty good fraction of the "whites" were probably Middle Easterners or whatever, rather than Northern Europeans). Perhaps I'm revealing my racial basis, but such very high relative Asian default rates seem doubtful to me. It also makes the use of the "NAM" term look pretty silly.

Personally, I've always suspected that a large fraction of the initial wave of defaults which triggered the Meltdown were probably by speculators, and the extremely low total default rates by this set of 240,000 homeowners up to 9/2007 might tend to support that theory.

On the other hand, I'm also not convinced by the central conclusion of the study, namely that the CRA had no relationship to higher default rates, and may have actually helped to lower mortgage default rates.

8/6/09, 10:38 AM

Anonymous SF said...

This link http://www.freddiemac.com/corporate/reports/moseley/chap6.htm
says that African-Americans are three times more likely to have a low FICO score than non-hispanic whites, and hispanics are twice as likely to have a low FICO score. You might multiply these two factors to estimate that African-Americans are 9.9 times more likely to be in foreclosure than whites, and Hispanics 3.2 to 5 times more likely. The definition of low FICO score in the link is less than 620, versus less than 640 in the fed paper, so that would throw the figures off a little.

8/6/09, 10:51 AM

Anonymous Anonymous said...

As always Steve, thanks for treading where few men tread. I used to think that the independent effect of race would be minimized(though still present) by controlling for income, and credit score. The effect is larger than I thought.

In part, maybe this racial disparity even when controlling for income and credit score is due to affirmative action. It's a lot more pervasive and destructive than its supporters care to admit.

It would be even better if we could control for IQ(and education) as well as income and credit score to compare the races. Unfortunately, this info isn't available.

8/6/09, 11:09 AM

Blogger Greg Marquez said...

Don't these statistics undermine the argument that giving loans to illegal immigrants is what caused the financial meltdown? Unless you're arguing that these were illegal alien blacks who defaulted more often than Hispanics? 239,101 mortgages to minorities and only 10,000 had entered the foreclosure process, isn't that less than 5%. Is it your argument that these 10,000 foreclosures were responsible for the housing crisis? Please explain.

8/6/09, 11:54 AM

Anonymous Anonymous said...

It would be even better if we could control for IQ(and education)

Indeed. I say we control for breathing and prove once and for all there are no racial differences.

(J/K, obviously there are some things to be teased out by controlling for all those things, I just couldn't resist)

~Svigor

8/6/09, 12:31 PM

Blogger Eric Rasmusen said...

As I understand it, FOIA only allows you to get information that already exists. So if the authors were careful enough never to calculate the raw summary statistics for foreclosures by race, they wouldn't have to give them to you. Probably they wouldn't have to even if they did calculate it, but never typed it up as a document, or kept it on file somewhere.

I think that's what public universities do now--- they make sure never to have any memos, even internal ones, listing student admission scores by race.

Also, the raw data is surely exempt from FOIA.

8/6/09, 12:41 PM

Anonymous Anonymous said...

"...after adjusting for income and FICO, minorities in California still had substantially higher foreclosure rates than whites"

This caught my eye. I have been assuming that once you control for FICO score and income, race plays no role in loan default rates. Wasn't that the point that Brimelow made in the 90's about the Boston Fed report on redlining?

Let me hazard a guess what's going on here. Living, working, and socializing in a diverse community in California for the past 15 years, I noticed an almost money madness that seemed to grip non-whites, especially the Chinese, during the housing bubble. Never a day went by during these years when I didn't overhear some Chinese person talking about how they were investing in real estate, working part time as a realtor or loan broker, selling some property at a profit, or buying another investment property to fix up and rent out. Oftentimes, the day job got short shrift as these people jabbered away on the office telephone in their native tongue while closing deals, negotiating interest rates, or fishing for opportunities.

As Barbara Walker is fond of reminding us over at Vdare, immigrants in the US are here for the money, while enjoying various statutory benefits for being in a minority. And it is often the most money-hungry of these third world gypsies who opt for a life in America. I knew one youngish woman who ditched her husband in Shanghai to become a mail order bride so she could come to the US and get her real estate license; her goal was to sell million dollar bungalows in Silicon Valley to Mandarin speaking technology workers.

So it would appear that Asians, who as a rule are known for thrift, careful planning, and organization, often end up being victims of dark forces that lie barely submerged in their personalities. Especially if you put them near a casino, which is basically what the California housing market was from 1999 to 2007.

8/6/09, 1:17 PM

Blogger Steve Sailer said...

Also, as RKU suggests, some not tiny proportion of white buyers in California in 2004-2006 were immigrants from the ex-Soviet Union and from the Middle East.

8/6/09, 1:20 PM

Blogger Steve Sailer said...

Yes, differences in net worth are a huge factor in foreclosure rates. And it's not just personal net worth, it's relatives' net worth, as well. For example, about 15 years ago, I kept an in-law from getting foreclosed upon with a $5k interest free loan. The in-law found a job and paid me back within a couple of years. If all your relatives are in Chiapas, however, you are less likely to be able to scratch together the money you need from family borrowing to get over a hump.

8/6/09, 1:24 PM

Blogger silly girl said...

"Fertility rates in rich countries on the rebound:

http://scienceblogs.com/notrocketscience/2009/08/fertility_rates_climb_back_up_in_the_most_developed_countrie.php"


That's right! Immigrants are moving in and having more kids, many of them on public assistance!

8/6/09, 2:50 PM

Blogger James A. Donald said...

Anonymous RKU said...
"Personally, I've always suspected that a large fraction of the initial wave of defaults which triggered the Meltdown were probably by speculators, and the extremely low total default rates by this set of 240,000 homeowners up to 9/2007 might tend to support that theory."

I was there in California at the height of the boom, and the vast majority of those buying expensive houses were Hispanics whose own mothers would have been reluctant to lend them five bucks. If a significant proportion of white speculators were involved, they were getting bums of politically correct ethnicity rounded up from the Home Depot parking lot to front for them - what they call in Malaysia a Baba Ali loan.

8/6/09, 6:10 PM

Blogger Statsquatch said...

This appears to be a case-control study. Foreclosures were matched with controls. There is no way to estimate incidence rates in a case-control study.

8/6/09, 9:26 PM

Anonymous Anonymous said...

Another thing which makes me suspicious of the data is that on an income-adjusted basis the Asian homeowners have default rates 60% *higher* than the white homeowners



And why does that make you suspicious?

8/7/09, 4:06 AM

Anonymous Anonymous said...

"as RKU suggests, some not tiny proportion of white buyers in California in 2004-2006 were immigrants from the ex-Soviet Union and from the Middle East"

On the other hand, a large percentage of Asian buyers in the bubble period were of Vietnamese, Cambodian, Laotian, Hmong, and Philippino origin.

8/7/09, 9:03 AM

Anonymous ben tillman said...

This link http://www.freddiemac.com/corporate/reports/moseley/chap6.htm
says that African-Americans are three times more likely to have a low FICO score than non-hispanic whites, and hispanics are twice as likely to have a low FICO score. You might multiply these two factors to estimate that African-Americans are 9.9 times more likely to be in foreclosure than whites....


Three times more likely equals four times as likely.

So, 4 x 3.3 = 13.2 as likely, or 12.2 times more likely. Learn what "more likely" means, for God's sake.

The authors need a lesson as well:

...whereas Latino and Asian borrowers were 2.5 and 1.6 times respectively more likely to be in foreclosure as white borrowers.

Unbelievable -- they mixed their idioms! What are they trying to say -- "2.5 and 1.6 times respectively more likely"? Or "2.5 and 1.6 times respectively as likely as"? The sentence has no meaning!

8/7/09, 12:47 PM

Blogger Statsquatch said...

I was wrong. You an estimate the incidence of foreclosure by race from this case – control study if you know the number of loans originated in California from 2004 – 2006 and assume the percent of minorities in the control set is the same the target set. Unfortunately, the authors of the report do not break out the percent of minorities in their cases and controls sets. There might be a way to estimate it by educated guesses. If I figure it out I will put it on my blog.

8/7/09, 9:06 PM

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