The Policy Implications of Portfolio Choice in Underserved Mortgage Markets

Homeownership increases the incentive to maintain property and neighborhood, as well as decreasing the outflow of rents from low-income zones. However these benefits are not costless to homeowners. With a mortgage comes the possibility of default, the financial demands of maintenance, a reduction in alternate investment opportunities, an increased exposure to fluctuations in local economic conditions, and a drastic reduction in the liquidity of personal wealth…