Here is a new paper from W. Scott Frame, Kristopher Gerardi, Erik J. Mayer, Billy Y. Xu, and Lawrence Chengzhi Zhao at the Atlanta Fed:
We study the impact of 2010 Justice Department cases against major lenders for alleged fraud in the Federal Housing Administration (FHA) mortgage insurance program. The suits resulted in more than $5 billion in settlements and caused the target banks and their peers to quickly exit the FHA market. Difference-in-difference and triple-difference tests using geographic variation in exposure to bank outflows show a 20 percent decrease in FHA lending in highly exposed areas. This reduction was not associated with improved underwriting rates or lower default rates. The FHA exit of the big banks has greatly reduced access for all low-income families to mortgages.
About Moses Sternstein, who also discusses it.
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