Abstract

http://ssrn.com/abstract=2367433
 
 

Citations (1)



 


 



Collateral Valuation and Borrower Financial Constraints: Evidence from the Residential Real Estate Market


Sumit Agarwal


National University of Singapore

Itzhak Ben-David


Ohio State University - Fisher College of Business, Finance Department; National Bureau of Economic Research (NBER)

Vincent Yao


Federal National Mortgage Association (Fannie Mae)

December 13, 2013


Abstract:     
Financially constrained borrowers have the incentive to influence the appraisal process in order to increase borrowing or reduce the interest rate. We document that the average valuation bias for residential refinance transactions is above 5%. The bias is larger for highly leveraged transactions, around critical leverage thresholds, and for transactions mediated through a broker. Mortgages with inflated valuations default more often. Lenders account for 60-90% of the bias through pricing.

Number of Pages in PDF File: 47

Keywords: collateral valuation, lending, banks, loans, default, financial crisis

JEL Classification: G01, G21

working papers series


Download This Paper

Date posted: December 15, 2013  

Suggested Citation

Agarwal, Sumit and Ben-David, Itzhak and Yao, Vincent, Collateral Valuation and Borrower Financial Constraints: Evidence from the Residential Real Estate Market (December 13, 2013). Available at SSRN: http://ssrn.com/abstract=2367433 or http://dx.doi.org/10.2139/ssrn.2367433

Contact Information

Sumit Agarwal (Contact Author)
National University of Singapore ( email )
15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)
HOME PAGE: http://www.ushakrisna.com
Itzhak Ben-David
Ohio State University - Fisher College of Business, Finance Department ( email )
2100 Neil Avenue
Fisher 700D
Columbus, OH 43210-1144
United States
773 988 1353 (Phone)
HOME PAGE: http://fisher.osu.edu/fin/faculty/Ben-David/index.htm

National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
HOME PAGE: http://fisher.osu.edu/fin/faculty/Ben-David/
Vincent Yao
Federal National Mortgage Association (Fannie Mae) ( email )
3900 Wisconsin Avenue, NW
Washington, DC 20016-2892
United States
Feedback to SSRN


Paper statistics
Abstract Views: 315
Downloads: 54
Download Rank: 159,417
Citations:  1

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.219 seconds