Utilizing Digital Tools for the Surveillance of the US Mortgage Market

16 Pages Posted: 30 Apr 2019

See all articles by Li Chang

Li Chang

Fordham University - Gabelli School of Business

Richard Koss

Columbia University - School of International & Public Affairs (SIPA)

Date Written: March 29, 2019

Abstract

The US mortgage market is of paramount economic and financial importance. While the causes of the Global Financial Crisis (GFC) remain a subject of vigorous debate, lax lending standards and opacity surrounding innovations in securitization are often cited as central issues. A decade following the Global Financial Crisis, we have demonstrated that digital tools have been developed in the mortgage space that have the potential to allow investors to form a clear view of the investment risks and opportunities, and policymakers to design regulations with a complete view of the behavior of all participants: borrowers, underwriters, servicers and investors. While big data tools have been around for an extended period, it is only recently that advanced techniques have come to the market that allow for more cost-effective analysis. The latest enhancement is the application of AI to this data to unify the information across disparate data sets. We have seen demonstrations of the power of these techniques in analyzing business models for financial institutions, and for informing policymakers about the implications of their decisions across broad categories of actors in this market. Looking ahead, the analysis performed here can be extended by matching loans across time as well as between different data sets, and through applications to different markets and countries.

Keywords: big data, AI, mortgage, bank

JEL Classification: C55, G14, G18, G21, G23

Suggested Citation

Chang, Li and Koss, Richard, Utilizing Digital Tools for the Surveillance of the US Mortgage Market (March 29, 2019). Available at SSRN: https://ssrn.com/abstract=3362477 or http://dx.doi.org/10.2139/ssrn.3362477

Li Chang (Contact Author)

Fordham University - Gabelli School of Business ( email )

113 West 60th Street
Bronx, NY 10458
United States

Richard Koss

Columbia University - School of International & Public Affairs (SIPA) ( email )

420 West 118th Street
New York, NY 10027
United States

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