Abstract

https://ssrn.com/abstract=2621867
 


 



Loan Originations and Defaults in the Mortgage Crisis: Further Evidence


Manuel Adelino


Duke University; Duke Innovation & Entrepreneurship Initiative

Antoinette Schoar


Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Felipe Severino


Tuck School of Business at Dartmouth

June 21, 2015

Tuck School of Business Working Paper No. 2621867

Abstract:     
This paper addresses two critiques by Mian and Sufi (2015a, 2015b) that were released in response to the results documented in Adelino, Schoar and Severino (2015). We confirm that none of the results in our previous paper are affected by the issues put forward in these critiques; in particular income overstatement does not drive any of our results. Our analysis shows that the origination of purchase mortgages increased across the whole income distribution during the 2002-2006 housing boom, and did not flow disproportionately to low-income borrowers. In addition, middle- and high-income, as well as middle- and high-credit-score borrowers (not the poor), represent a larger fraction of delinquencies in the crisis relative to earlier periods. The results are inconsistent with the idea that distortions in the origination of credit caused the housing boom and the crisis and are more consistent with an expectations-based view where both home buyers and lenders were buying into increasing housing values and defaulted once prices dropped.

Number of Pages in PDF File: 30

Keywords: Mortgage credit, mortgage origination, financial crisis, income

JEL Classification: E44, E51, G21, L85, O51, R21, R30, D30, G21


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Date posted: June 23, 2015 ; Last revised: August 12, 2015

Suggested Citation

Adelino, Manuel and Schoar, Antoinette and Severino, Felipe, Loan Originations and Defaults in the Mortgage Crisis: Further Evidence (June 21, 2015). Tuck School of Business Working Paper No. 2621867. Available at SSRN: https://ssrn.com/abstract=2621867 or http://dx.doi.org/10.2139/ssrn.2621867

Contact Information

Manuel Adelino
Duke University ( email )
Duke Innovation & Entrepreneurship Initiative ( email )
215 Morris St., Suite 300
Durham, NC 27701
United States

Antoinette Schoar
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
50 Memorial Drive, E52-447
Cambridge, MA 02142
United States
617-253-3763 (Phone)
617-258-6855 (Fax)

National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Felipe Severino (Contact Author)
Tuck School of Business at Dartmouth ( email )
Hanover, NH 03755
United States
HOME PAGE: http://www.dartmouth.edu/~fseverino
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