The performance of non-owner-occupied mortgages during the housing crisis

The past decade has seen a dramatic rise and fall in home values within the US, causing policymakers to contemplate their cause and solution. Much of the attention and blame for the rise in mortgage delinquencies and foreclosures has been attributed to mortgages that were originated to subprime homeowners. These homeowners have high loan-to-value ratios, high debt-to-income ratios, low credit scores, and little or no documentation of income. In addition to rising risk, other factors contributed to the housing crisis. In this article, the author investigates the size and importance of the non-owner occupant housing market prior to the housing crisis. Using two nationally representative data sets for mortgage originations, he shows that prior to the housing crisis, the size of the mortgage market for non-owner occupants grew at a faster pace when compared to owner occupants.