The Underwriting, Choice And Performance Of Government-Insured Mortgages In Russia

Evgeniy Ozhegov

HSE Working papers from National Research University Higher School of Economics

Abstract: This paper analyzes the mortgage borrowing process from a Russian state-owned provider of residential housing mortgages concentrating on the choice of having government insurance. This analysis takes into account the underwriting process and the choice of loan limit by the bank, the choice of contract terms and the performance of all loans issued from 2008 to 2012. Our dataset contains demographic, financial, loan terms and the performance information for all applications. We use a multistep nonparametric approach to estimate the determinants of bank and borrower choice. The main finding that the probability of having government insurance is linked to riskier loans, but insured loans also are more likely to be approved by the bank. The bank, when approving a borrower, takes into account not the probability of default but the difference between the probability of default and having government insurance.

Keywords: mortgage; terms choice; default; nonparametrics. (search for similar items in EconPapers)
JEL-codes: C14 C30 C51 G21 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2014
New Economics Papers: this item is included in nep-cis, nep-ias, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
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Published in WP BRP Series: Financial Economics / FE, June 2014, pages - 36

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Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:31/fe/2014

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