 The Pricing of Mortgages by Brokers: An Agency Problem?Michael LaCour-Little Journal of Real Estate Research, 2009, vol. 31, issue 2, 235-264 Abstract: Mortgage brokers have grown in importance in the home mortgage origination process in recent years, suggesting they provide a valuable service matching borrowers and lenders, although their involvement has also been linked to the recent surge in mortgage defaults and foreclosures. As in other markets dominated by brokers, agents’ incentives are often poorly aligned with those with whom they do business, in this case both the lenders who bear the risks once the loan is originated and the consumer who assumes liability for the debt and contract terms. This paper describes the institutional arrangements under which mortgage brokers operate and empirically test whether loans originated by mortgage brokers are lower in cost than those that would be available directly from retail lenders. The results suggest that loans originated by brokers cost borrowers about 20 basis points more, on average, than retail loans and that this premium is higher for lower income and lower credit score borrowers. Date: 2009 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:rjerxx:v:31:y:2009:i:2:p:235-264 Ordering information: This journal article can be ordered from DOI: 10.1080/10835547.2009.12091242 Access Statistics for this article Journal of Real Estate Research is currently edited by William Hardin and Michael Seiler More articles in Journal of Real Estate Research from Taylor & Francis Journals |
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