Abstract

https://ssrn.com/abstract=2485308
 
 

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Did Dubious Mortgage Origination Practices Distort House Prices?


John M. Griffin


University of Texas at Austin - Department of Finance

Gonzalo Maturana


Emory University - Goizueta Business School

January 2016

27th Australasian Finance and Banking Conference 2014 Paper

Abstract:     
ZIP codes with high concentrations of originators who misreported mortgage information experienced a 75% larger relative increase in house prices from 2003 to 2006 and a 90% larger relative decrease from 2007 to 2012 compared to other ZIP codes. Several causality tests show that high fractions of dubious originators in a ZIP code lead to large price distortions. Originators with high misreporting gave credit to borrowers with high ex-ante risk, yet further understated the borrowers' true risk. Overall, excess credit facilitated through dubious origination practices explain much of the regional variation in house prices over a decade.

Number of Pages in PDF File: 55

Keywords: housing bubble, misreporting, mortgage originators, bad practices

JEL Classification: G21, G23, R30, R31


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Date posted: August 23, 2014 ; Last revised: January 17, 2016

Suggested Citation

Griffin, John M. and Maturana, Gonzalo, Did Dubious Mortgage Origination Practices Distort House Prices? (January 2016). 27th Australasian Finance and Banking Conference 2014 Paper. Available at SSRN: https://ssrn.com/abstract=2485308 or http://dx.doi.org/10.2139/ssrn.2485308

Contact Information

John M. Griffin (Contact Author)
University of Texas at Austin - Department of Finance ( email )
Red McCombs School of Business
Austin, TX 78712
United States
512-471-6621 (Phone)
HOME PAGE: http://www.jgriffin.info

Gonzalo Maturana
Emory University - Goizueta Business School ( email )
1300 Clifton Road
Atlanta, GA 30322-2722
United States
HOME PAGE: http://www.gonzalomaturana.com/
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