Is There Discrimination in Overage Pricing?
39 Pages Posted: 5 May 2003
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: Suggested Citation