55 Pages Posted: 23 Aug 2014 Last revised: 17 Jan 2016
Date Written: January 2016
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.
Keywords: housing bubble, misreporting, mortgage originators, bad practices
JEL Classification: G21, G23, R30, R31
Suggested Citation: 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