Abstract

http://ssrn.com/abstract=1967179
 
 

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Did Local Lenders Forecast the Bust? Evidence from the Real Estate Market


Kristle Romero Cortés


Federal Reserve Banks - Federal Reserve Bank of Cleveland

February 2015

25th Australasian Finance and Banking Conference 2012

Abstract:     
This paper shows that mortgage lenders with a physical presence near the property being financed have better information about home-price fundamentals than non-local lenders. Within lender, loan origination and retention decrease when the lender has a branch and the area experiences high home price appreciation. Across markets, local loans decrease from 2002-06 as home prices rise. Where local loans were made, home prices fell less from 2006-09. A standard deviation increase in local loans is associated with 5 fewer foreclosures per one thousand homes. The results for housing prices and foreclosures are even stronger when lenders retain the loans.

Number of Pages in PDF File: 59

Keywords: Local Share, House price growth

JEL Classification: G21


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Date posted: December 2, 2011 ; Last revised: March 16, 2015

Suggested Citation

Cortés, Kristle Romero, Did Local Lenders Forecast the Bust? Evidence from the Real Estate Market (February 2015). 25th Australasian Finance and Banking Conference 2012. Available at SSRN: http://ssrn.com/abstract=1967179 or http://dx.doi.org/10.2139/ssrn.1967179

Contact Information

Kristle Romero Cortés (Contact Author)
Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )
East 6th & Superior
Cleveland, OH 44101-1387
United States
HOME PAGE: http://www.clevelandfed.org/research/economists/cortes/
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