Download or read book Overages Mortgage Pricing and Race written by Harold A. Black and published by . This book was released on 2003 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: Overages, or yield spreads, are common in the pricing of mortgages. However, few customers realize that such yield spreads exist. Given that overages often constitute a significant portion of the income of the mortgage loan officer, one would assume that the loan officer seeks to maximize the yield spreads. Our analysis finds that overages are seldom maximized and in most instances are not included in the price of the mortgage. We find that the bargaining abilities of the loan officers and the borrowers are important in determining the amount of overages paid by borrowers. In particular, we note that there are differences in the incidence of overages and the amount of overages by the race of the applicants. Thus, such behavior would lend itself to scrutiny by the regulatory authorities. The data set is unique and is proprietary data from a national mortgage lending institution located in a major U.S. city with a high population of Hispanics and African-Americans. We find that bargaining power of market participants is an important determinant of overages. We find that the yield spreads of Hispanic applicants who purchase homes are larger than those of whites. We also find that there are no differences by race for black applicants when compared to white applicants. We also find significant racial differences in overages for Hispanics and blacks for houses that are refinanced.

Download or read book Is There Discrimination in Mortgage Pricing written by Harold Alonza Black and published by . This book was released on 2001 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Overages in Mortgage Pricing written by Harold A. Black and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We conduct an empirical investigation of the relative importance of competing hypotheses that attempt to explain observed differentials in overage pricing. Our analysis makes several contributions. First, we use tobit techniques to estimate the parameters of the model. Second, we include a number of variables that are not available in previous analysis. Specifically, we use borrower and lender characteristics that go beyond gender and race. Third, we are able to consider the impact of the bargaining capabilities of individual loan officers on the overages paid by borrowers, including minorities and women.Using proprietary data from different branches of a particular bank, this paper demonstrates that a large component of the explained variance in overages traces to variables proxying for the degree of competitiveness in the markets associated with these loans, and to differences in the bargaining power and expertise of both loan officers and borrowers. We find differences in overages collected from different ethnic groups, and though it is far too soon to conclude that this is due to bigotry, to the extent that our models are well-specified, this would probably constitute discrimination from a regulatory perspective. Variables controlling for risk prove less effective in explaining overages, perhaps because our sample includes only loans that were actually approved and made. Thus, they all represent relatively good risks, and might not display enough risk variation to detect.

Download or read book Is There Discrimination in Mortgage Pricing The Case of Overages written by Harold A. Black and published by . This book was released on with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Federal Reserve Bank of Atlanta presents the full text of the April 2001 working paper entitled "Is There Discrimination in Mortgage Pricing? The Case of Overages," written by Harold A. Black, Thomas P. Boehm, and Ramon P. DeGennaro. The text is available in PDF format. The authors conclude that the most effective way to eliminate racial differences in overages is to develop policies that allow minorities to bargain more effectively.

Download or read book Unintended Consequences of Risk Based Pricing written by Kenneth N. Daniels and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The following analysis focuses on the role that risk pricing has had in the allocation and access to mortgage funds, specifically how it results in cost differences by race. Using a sample of fixed-rate first lien mortgages, we control for the risk characteristics of borrowers and assets. We find that borrowers with comparable credit quality experience significantly higher costs for mortgages in neighborhoods with a high density of minority households. Further, when the pricing differential is controlled for in a model of mortgage default, there is no support for neighborhood price differences. This finding illustrates a potential inequity that results from efficient/risk pricing in mortgage underwriting.

Download or read book Is There Discrimination in Overage Pricing written by Harold A. Black and published by . This book was released on 2003 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Mortgage overage pricing is little understood by consumers and has received little academic scrutiny. We consider the impact of the market power of individual loan officers on overages paid by borrowers, particularly minorities. We include numerous borrower and lender characteristics unavailable previously.We find that minorities who purchase homes pay larger overages than whites, but our evidence suggests that this traces to differences in the pools of borrowers rather than to racial discrimination. We conclude that a more effective way to eliminate racial differences in overages is to increase minorities' ability to bargain rather than to enact additional anti-discrimination laws.

Download or read book Is Discretionary Pricing Discretionary The Case of Overages in Mortgage Lending written by Harold A. Black and published by . This book was released on 2006 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research on moral hazard and adverse selection indicates that restricting the ability of lenders to price loans could result in less credit being extended to those in the riskiest credit tier. Given that blacks have worse credit than similarly situated whites, then they would be worse off if overages were banned. Second, borrowers who are unfamiliar with the financial system, such as first-time customers, may require more effort by the loan officer to guide the applicant through the process. Unless lenders can recover the cost of this service, the number of loans to such borrowers will probably decrease. Third, research indicates that blacks do not bargain or comparison shop as much as whites. This implies that, ceteris paribus, markup differences will persist even after accounting for risk, service and demographic variables. Finally, these differences may vary across local markets throughout the country.Future research efforts should analyze loan payment performance after controlling for market forces within the relevant local market. If unexplained pricing differentials exist between minorities and whites, yet loan payments performance is the same, then clearly there exists an arbitrary component to pricing that is probably discriminatory. Alternatively, if unexplained differentials correspond to payment performance, then these differentials are not arbitrary and discriminatory but market driven. Thus, policy makers and regulators should not strive to eliminate differential pricing but should concern themselves with those differences that are unrelated to market forces.

Download or read book Mortgage Pricing Differentials across Hispanic African American and White Households written by Thomas P. Boehm and published by . This book was released on 2008 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This article uses recent metropolitan area samples of the American Housing Survey (AHS) for 1998, 2002, and 2004 to investigate differences in the terms, conditions, and use of mortgage financing alternatives. It investigates how financing and mortgage rates differ for Hispanics compared with other ethnic groups across a number of different U.S. housing markets. The principal focus of the article is to examine the extent to which differences in the interest rates obtained by homeowners of different race/ethnicity and income levels can be explained by differences in the characteristics of the borrowers, the property, and the loan itself. For example, Hispanic households appear to have a relatively high burden of first mortgage debt. Although limitations in the information available in the AHS do not allow for the determination of whether discrimination exists for minorities in the sample, this data set does identify important differences in the characteristics of these households, which in turn affect mortgage pricing.

Download or read book Subprime Mortgage Pricing written by Andrew Haughwout and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Mortgage Lending Racial Discrimination and Federal Policy written by John M. Goering and published by University Press of America. This book was released on 1996 with total page 778 pages. Available in PDF, EPUB and Kindle. Book excerpt: Whether or not there is discrimination in the mortgage lending market is one of the most extensively debated issues in the civil rights arena. Because many early studies were flawed and the results misinterpreted on both sides of the debate, there is little agreement as to the next essential steps in either research or enforcement. This comprehensive volume seeks to clarify the debate by including rigorous review of fair lending research, applied projects, and enforcement activities to date, as well as recommendations for research needed to resolve unanswered questions. The intent of the authors is to help the housing industry, regulators, advocates, and the research community to better understand the issue of discrimination in an important area of American life -- the right to take out a mortgage to buy a home based on one's credit worthiness, not on one's race or ethnic group.

Download or read book Racial Discrepancy in Mortgage Interest Rates written by Ping Cheng and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Existing research on racial discrimination in mortgage lending has overwhelmingly focused on whether black applicants are more likely to be denied for credit than comparable white applicants. This study investigates whether the approved black applicants are likely charged higher interest rates than their white counterparts. Using data from three waves of the U.S. Survey of Consumer Finance, our results suggest that black borrowers on average pay about 29 basis points more than comparable white borrowers. We also find that rate disparity mainly occurs to young borrowers with low education as well as those borrowers whose income and credit disqualify them for prime lending rates. Furthermore, among borrowers in the higher rate groups, black women seem to receive much more disparate treatment than black men. We conclude that, while the racial disparity in mortgage rates is widespread between black and white borrowers, it is the more financially vulnerable black women who suffer the most.

Download or read book Differences in Subprime Loan Pricing Across Races and Neighborhoods written by Andra C. Ghent and published by . This book was released on 2014 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate whether race and ethnicity influenced subprime loan pricing during 2005, the peak of the subprime mortgage expansion. We combine loan-level data on the performance of non-prime securitized mortgages with individual- and neighborhood-level data on racial and ethnic characteristics for metropolitan areas in California and Florida. Using a model of rate determination that accounts for predicted loan performance, we evaluate the differences in subprime mortgage rates in terms of racial and ethnic groups and neighborhood characteristics. We find evidence of adverse pricing for blacks and Hispanics. The evidence of adverse pricing is strongest for purchase mortgages and mortgages originated by non-depository institutions.

Download or read book Discrimination and Racial Differences in Home Mortgage Interest Rates written by Gordon Crawford and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper estimates the possible yield premia paid by Asians, Hispanics, and African Americans borrowers to a national home mortgage lender in the years 1988-1989. The calculated premia are defined to hold daily market rates, rate lock protection, and borrower risk factors constant. Conventional loan interest rates are almost perfectly race- neutral. However, government (FHA and VA) credit models show significant, but very small premia paid by Hispanics and African Americans. The estimated premium for Hispanic borrowers is not robust to some reasonable alternative specifications. The differential for African American borrowers is more robust, but may be explained by the inability of African Americans to find alternatives to their rate commitments when rates fall.

Download or read book Race and Subprime Loan Pricing written by Andra C. Ghent and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we investigate whether race and ethnicity influenced subprime loan pricing during 2005, the peak of the subprime mortgage expansion. We combine loan-level data on the performance of non-prime securitized mortgages with individual- and neighborhood-level data on racial and ethnic characteristics for metropolitan areas in California and Florida. Using a model of rate determination that accounts for predicted loan performance, we evaluate the presence of disparate impact and disparate treatment from race and ethnicity on rate-setting behavior across the most popular subprime mortgage products. In contrast with previous studies of the subprime market, we find evidence of adverse pricing effects for black and Hispanic borrowers.

Download or read book Mortgage Default Rates and Borrower Race written by Richard Anderson and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We estimate a mortgage default model with national data on conventional mortgages that were current from 1986 to 1992. Our analysis confirms the results of previous analyses of Federal Housing Authority mortgages: Black households have higher marginal default rates, controlling for differences in borrower and property characteristics. Further, we do not find that Black borrowers have significantly more home equity. These results do not provide evidence of racial discrimination in mortgage lending and suggest that differences in default costs or transaction costs may explain differences in default rates.

Download or read book Fair Lending Analysis of Mortgage Pricing written by Yan Zhang and published by . This book was released on 2010 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Economics of Small Businesses written by Giorgio Calcagnini and published by Springer Science & Business Media. This book was released on 2011-01-07 with total page 235 pages. Available in PDF, EPUB and Kindle. Book excerpt: Is small still beautiful? The recent economic and financial crisis has shown that developed countries in which firms are smaller suffered the biggest GDP plunges. Today, economic growth depends more than in the past on sound and well-organized firms, which means more innovation, a better educated labor force, higher likelihood of access to financial resources and efficient investments. This does not mean the end of small-sized firms, but that they need to be different from the way they were in the past. This book provides an international perspective on analyses and policy recommendations for how small businesses can reinforce their role in modern economies.