Religion and Mortgage Misrepresentation

James Conklin (), Moussa Diop () and Mingming Qiu ()
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James Conklin: University of Georgia
Moussa Diop: University of Southern California
Mingming Qiu: Michigan State University

Journal of Business Ethics, 2022, vol. 179, issue 1, No 15, 273-295

Abstract: Abstract We investigate whether religion acts as a deterrent to the types of mortgage misrepresentation that played a significant role in the recent housing boom and bust. Using a large sample of mortgages originated from 2000 to 2007, we provide evidence that local religious adherence (religiosity) is associated with a lower likelihood of home appraisal overstatement and owner occupancy misreporting. The evidence on borrower income misrepresentation is mixed. Religiosity does not appear to reduce the incidence of income misrepresentation; however, it seems to restrain the degree to which income is misrepresented. Our results are generally consistent with the hypothesis that religion, as a set of social norms, fosters ethical behavior, and possibly risk aversion, in the mortgage market.

Keywords: Mortgage fraud; Ethical behavior; Religion; Risk aversion; Appraisal bias; Owner occupancy misreporting; Income documentation; Liars loans (search for similar items in EconPapers)
JEL-codes: G21 G31 G32 R3 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10551-021-04831-2

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