Is There Discrimination in Overage Pricing?

39 Pages Posted: 5 May 2003  

Harold A. Black

University of Tennessee, Knoxville - Department of Finance

Ramon P. DeGennaro

University of Tennessee, Knoxville - Department of Finance

Thomas P. Boehm

University of Tennessee, Knoxville - Department of Finance

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Abstract

Mortgage overage pricing is little understood by consumers and has received little academic scrutiny. We consider the impact of the market power of individual loan officers on overages paid by borrowers, particularly minorities. We include numerous borrower and lender characteristics unavailable previously.

We find that minorities who purchase homes pay larger overages than whites, but our evidence suggests that this traces to differences in the pools of borrowers rather than to racial discrimination. We conclude that a more effective way to eliminate racial differences in overages is to increase minorities' ability to bargain rather than to enact additional anti-discrimination laws.

Keywords: Overage, mortgage, discrimination, lending, race

JEL Classification: G21

Suggested Citation

Black, Harold A. and DeGennaro, Ramon P. and Boehm, Thomas P., Is There Discrimination in Overage Pricing?. Available at SSRN: https://ssrn.com/abstract=371740 or http://dx.doi.org/10.2139/ssrn.371740

Harold A. Black

University of Tennessee, Knoxville - Department of Finance ( email )

Knoxville, TN 37996
United States
423-974-1721 (Phone)
423-974-1716 (Fax)

Ramon P. DeGennaro (Contact Author)

University of Tennessee, Knoxville - Department of Finance ( email )

423 Stokely Management Center
Knoxville, TN 37996
United States
865-974-1726 (Phone)
865-974-1716 (Fax)

Thomas P. Boehm

University of Tennessee, Knoxville - Department of Finance ( email )

Knoxville, TN 37996
United States
615-974-3216 (Phone)
615-974-1716 (Fax)

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