Fair Lending Analysis of Mortgage Pricing: Does Underwriting Matter?

Yan Zhang ()

The Journal of Real Estate Finance and Economics, 2013, vol. 46, issue 1, 151 pages

Abstract: This paper evaluates the impact of underwriting decision on fair lending risk assessments of loan pricing. Using data from one national bank that contain a rich set of decisioning variables, we compare the estimation results from the single equation model with those from the sample selection type of models. Then we conduct three simulation studies to evaluate the sample selection bias and omitted variable bias under various scenarios. We demonstrate that the single equation approach could potentially generate biased estimates of pricing disparities when it fails to consider the impact of the underwriting decision. Copyright Springer Science+Business Media, LLC (outside the USA) 2013

Keywords: Underwriting; Pricing; Fair lending analysis; Pricing disparities; Sample selection bias; Omitted variable bias (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jrefec:v:46:y:2013:i:1:p:131-151

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DOI: 10.1007/s11146-011-9319-y

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