Did technology contribute to the housing boom? Evidence from MERS

Stefan Lewellen and Emily Williams

Journal of Financial Economics, 2021, vol. 141, issue 3, 1244-1261

Abstract: We examine the effects of the Mortgage Electronic Registration System, or MERS, on mortgage origination volumes and foreclosure rates prior to the Great Recession. MERS was introduced in the late 1990s and significantly reduced the cost and time associated with secondary mortgage sales. Using novel data from the Massachusetts Registry of Deeds, we show that the introduction of MERS led to an expansion in mortgage credit supply that was primarily fueled by nonbank lenders originating mortgages to low-income borrowers. We also find that foreclosure rates were higher on these mortgages. Our paper provides a new explanation for the credit supply increases observed prior to the 2008 financial crisis and for the disproportionate supply increase observed in low-income areas.

Keywords: Credit supply; Housing boom; Financial innovation; Mortgages; Nonbank lenders (search for similar items in EconPapers)
JEL-codes: D22 D24 G21 G23 G51 L11 O31 O33 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:141:y:2021:i:3:p:1244-1261

DOI: 10.1016/j.jfineco.2021.04.002

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