WOODSTOCK INSTITUTE | SEPTEMBER 2014 September 30, 2014 Access to Capital: To Have and Have Not Spencer M. Cowan | Vice President Woodstock Institute | Chicago, Illinois P | F WoodstockInstitute

Overview Context Purpose Sources and methods Results and mapping WOODSTOCK INSTITUTE | SEPTEMBER 2014

Context of this Research Chicago and six county region –includes Chicago, Cook County, and adjacent counties From 2008 to 2012 Persistent patterns of disadvantage –population, foreclosures, vacancies, income, and employment WOODSTOCK INSTITUTE | SEPTEMBER 2014

Foreclosures and Vacancies WOODSTOCK INSTITUTE | SEPTEMBER 2014

Income and Employment WOODSTOCK INSTITUTE | SEPTEMBER 2014

Purpose of this Research Explore the concept of risk-layering –multiple factors with cumulative or multiplicative impact –mutually reinforcing Examine mortgage and business lending –see if the pattern mirrors existing disadvantage WOODSTOCK INSTITUTE | SEPTEMBER 2014

Sources Mortgage loans –Home Mortgage Disclosure Act Small business loans –Community Reinvestment Act –HUD/USPS vacancy dataset Income, race, and housing units –Federal Financial Institutions Examination Council –Decennial census WOODSTOCK INSTITUTE | SEPTEMBER 2014

Mortgage Lending Examined patterns of mortgage lending –all property types, first lien, purchase Analysis by income and racial characteristics of the census tract –low-, moderate-, middle-, and upper-income –majority white, majority minority For the period 2008 – 2012 WOODSTOCK INSTITUTE | SEPTEMBER 2014

Housing Units by Income and Race WOODSTOCK INSTITUTE | SEPTEMBER 2014

Mortgage Applications per 100 Units WOODSTOCK INSTITUTE | SEPTEMBER 2014

Probability of Mortgage Origination WOODSTOCK INSTITUTE | SEPTEMBER 2014

Mortgage Originations per 100 Units WOODSTOCK INSTITUTE | SEPTEMBER 2014

Average Amount Originated per Unit WOODSTOCK INSTITUTE | SEPTEMBER 2014

Small Business Loans Examined patterns of small loans to businesses –loans, lines of credit, credit cards –amounts under $1,000,000 Analysis by income and racial characteristics of the census tract –low-, moderate-, middle-, and upper-income –majority white, majority minority For the period 2008 – 2012 WOODSTOCK INSTITUTE | SEPTEMBER 2014

Businesses by Income and Race WOODSTOCK INSTITUTE | SEPTEMBER 2014

Number of Loans per Business WOODSTOCK INSTITUTE | SEPTEMBER 2014

Amount of Loans per Business WOODSTOCK INSTITUTE | SEPTEMBER 2014

Findings Probability of mortgage origination –higher in majority white tracts than in majority minority tracts regardless of tract income level For every tract income level –number and average amount of mortgages and small business loans were lower in majority minority tracts than in majority white tracts WOODSTOCK INSTITUTE | SEPTEMBER 2014

Total Mortgage Amount Originated WOODSTOCK INSTITUTE | SEPTEMBER 2014

Total Business Loans Originated WOODSTOCK INSTITUTE | SEPTEMBER 2014

Findings Low- and moderate-income, majority minority tracts receive a smaller share of mortgages and small business loans than their share of housing and businesses –20.2 percent of units, 6.4 percent of mortgage volume –13.6 percent of businesses, 7.8 percent of small business loan volume WOODSTOCK INSTITUTE | SEPTEMBER 2014

Analysis of Lending Patterns Categorized 77 Chicago Community Areas into deciles –based on average mortgage amount per housing unit –based on average loan amount per business Cross-tabulation of Community Areas –to show extent to which tracts lack access to both types of credit WOODSTOCK INSTITUTE | SEPTEMBER 2014

Mortgage and Business Deciles WOODSTOCK INSTITUTE | SEPTEMBER 2014

Mapping the Decile Distribution WOODSTOCK INSTITUTE | SEPTEMBER 2014

Conclusions Disadvantage is multi-layered –foreclosures, vacancies, income, employment, and access to capital tend to overlap Addressing the multiple symptoms simultaneously may be necessary to overcome the problems WOODSTOCK INSTITUTE | SEPTEMBER 2014

September 30, 2014 Access to Capital: To Have and Have Not Spencer M. Cowan | Vice President Woodstock Institute | Chicago, Illinois P | F WoodstockInstitute