Ecological neighborhood-differences in mortgage default: investments in homes and communities

Abstract

Empirical investigations that examine mortgage default tend to frame studies with theory that emphasizes individual financial factors and minimizes ecological factors, which may influence defaulters' opinions of their homes as investments. While recent qualitative work has elucidated the emotional and psychological impacts of foreclosure, these investigations have not focused on the ways that neighborhood characteristics may affect these trends. This study of two neighborhoods in Nashville, TN addresses these gaps. A Ward's cluster analysis grouped high-foreclosure census tracts into neighborhoods with distinct foreclosure risk-factors based on structural characteristics and environmental stressors. Interviews with defaulters from the two neighborhoods with the highest differences in risk-factors illuminate informants' opinions of homeownership as an investment and further solidify how the distinct attributes of these neighborhoods relate to individual and collective opinions about local housing markets. The idea of an ecology of despair and ethnocentric attitudes are discussed.