Does Borrower and Broker Race Affect the Cost of Mortgage Credit?

Why don’t lenders renegotiate more home mortgages? Redefaults, self-cures and securitization

Brent Ambrose, James N Conklin and Luis A Lopez

The Review of Financial Studies, 2021, vol. 34, issue 2, 790-826

Abstract: We test for pricing disparities in mortgage contracts using a novel data set that allows us to observe the race and ethnicity of both parties to the loan. We find that minorities pay between 3% and 5% more in fees than similarly qualified whites when obtaining a loan through the same white broker. Critically, we find that the premium paid by minorities depends on the race of the broker. We also examine recent policy changes around broker compensation rules that may not only reduce these price disparities but may also limit access to credit for minorities.

JEL-codes: G21 G28 J15 L85 R20 R21 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (19)

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