Mortgage Lending Discrimination Across the U.S.: New Methodology and New Evidence

Manthos Delis () and Panagiotis Papadopoulos ()
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Panagiotis Papadopoulos: University of Surrey

Journal of Financial Services Research, 2019, vol. 56, issue 3, No 5, 368 pages

Abstract: Abstract Is there discrimination in mortgage-loan origination and pricing? If so, does the level of discrimination differ before and after the eruption of the subprime crisis? Using data from 6.5 million loan applications from 2004 through 2013, we propose a novel approach aiming to substantially lower the notorious omitted-variable bias of the Home Mortgage Disclosure Act (HMDA) database and identify the level of racial, ethnic, and gender discrimination in mortgage lending across the United States. In stark contrast with previous studies, we find, on average, very little discrimination in loan origination. Although discrimination increases somewhat after 2007, its probability remains well below 1%. In contrast, we find that white (non-Hispanic) applicants pay a lower spread on the originated loans by 0.37 (0.11) basis points, a result that almost entirely comes from the pre-crisis period.

Keywords: Mortgage lending; Racial and ethnic discrimination; HMDA (search for similar items in EconPapers)
JEL-codes: G21 J15 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s10693-018-0290-0

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