Abstract

https://ssrn.com/abstract=2631750
 


 



Fraudulent Income Overstatement on Mortgage Applications During the Credit Expansion of 2002 to 2005


Atif R. Mian


Princeton University - Department of Economics; Princeton University - Woodrow Wilson School of Public and International Affairs; NBER

Amir Sufi


University of Chicago - Booth School of Business; NBER

June 16, 2016

Chicago Booth Research Paper No. 15-16
Fama-Miller Working Paper

Abstract:     
Treating fraudulently overstated income on mortgage applications as true income leads to incorrect conclusions on the nature of the mortgage credit supply expansion toward marginal borrowers from 2002 to 2005. A positive gap between zip-code level income growth calculated from mortgage applications and income growth from the IRS likely reflects mortgage fraud, not an improvement in home-buyer income. In support of the credit supply view, mortgage credit for home purchase expanded significantly more in low credit score neighborhoods on both the extensive and intensive margin from 2002 to 2005, even though these neighborhoods deteriorated on many measures of income prospects.

Number of Pages in PDF File: 46

Keywords: mortgage, fraud, subprime, defaults, income overstatement


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Date posted: July 17, 2015 ; Last revised: June 17, 2016

Suggested Citation

Mian, Atif R. and Sufi, Amir, Fraudulent Income Overstatement on Mortgage Applications During the Credit Expansion of 2002 to 2005 (June 16, 2016). Chicago Booth Research Paper No. 15-16; Fama-Miller Working Paper. Available at SSRN: https://ssrn.com/abstract=2631750 or http://dx.doi.org/10.2139/ssrn.2631750

Contact Information

Atif R. Mian
Princeton University - Department of Economics ( email )
Princeton, NJ 08544-1021
United States

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )
Princeton University
Princeton, NJ 08544-1021
United States
NBER
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Amir Sufi (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Chicago Booth School of Business Logo

NBER
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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