Income, location and default: Some implications for community lending

This paper investigates differences in default losses ac:ross income groups and neighborhoods, in an effort to see if there are significant difference s between default experience on loans to low-income households or low-incom e neighborhoods and other loans. We find that while defaults and losses are somewhat higher in low-income neighborhoods, default behavior is similar i n the sense that responses to negative equity are similar across neighborho ods, and remaining differences are small and might be explained by omitted variables such as those measuring credit history.