| Abstract: | Access to credit in lower-income communities has become an increasingly central public policy issue in financial sector regulation over the past five years. One important reform was the establishment of purchasing goals for the government-sponsored secondary mortgage markets (Fannie Mae and Freddie Mac) in 1992. This paper examines the central city lending goal, using the St. Louis MSA as a case study. Census tracts are clustered according to five variables argued to impede secondary market purchases of home loans in some neighborhoods. Borrower characteristics and lending patterns are compared across the clusters of tracts, and across central city and suburban tracts. Clustered tracts are found to be more strongly related to a set of key lending variables than are tracts divided according to central city/ suburban boundaries. The paper concludes that targeting affirmative lending requirements on the basis of neighborhood characteristics rather than political or statistical divisions may provide a more appropriate framework for efforts to expand access to credit. However, the analysis of spatial differences in lending patterns raises a number of questions that require further research. |
