The Impact of Minority Representation at Mortgage Lenders

72 Pages Posted: 10 Mar 2022 Last revised: 7 Jul 2022

See all articles by W. Scott Frame

W. Scott Frame

Federal Reserve Bank of Dallas

Ruidi Huang

Southern Methodist University (SMU) - Finance Department

Erik J. Mayer

Southern Methodist University (SMU) - Finance Department

Adi Sunderam

Harvard University - Business School (HBS)

Multiple version iconThere are 3 versions of this paper

Date Written: October 19, 2021

Abstract

We study links between the labor market for loan officers and access to mortgage credit. Using novel data matching the (near) universe of mortgage applications to loan officers, we find that minorities are significantly underrepresented among loan officers. Minority borrowers are less likely to complete mortgage applications, have completed applications approved, and to ultimately take-up a loan. These disparities are significantly reduced when minority borrowers work with minority loan officers. Minority borrowers working with minority loan officers also have lower default rates. Our results suggest that minority underrepresentation among loan officers has adverse effects on minority borrowers’ access to credit.

Keywords: Race, Mortgage, Credit Access, Loan Officer, Household Finance, Financial Institution

JEL Classification: D14, G21, G28, G50, J01, J15

Suggested Citation

Frame, W. Scott and Huang, Ruidi and Mayer, Erik J. and Sunderam, Adi, The Impact of Minority Representation at Mortgage Lenders (October 19, 2021). SMU Cox School of Business Research Paper No. 22-08, Available at SSRN: https://ssrn.com/abstract=4054761 or http://dx.doi.org/10.2139/ssrn.4054761

W. Scott Frame

Federal Reserve Bank of Dallas ( email )

2200 N Pearl Street
Dallas, TX 75201
United States
214-922-6984 (Phone)

Ruidi Huang

Southern Methodist University (SMU) - Finance Department ( email )

United States

Erik J. Mayer (Contact Author)

Southern Methodist University (SMU) - Finance Department ( email )

United States

HOME PAGE: http://www.erikjmayer.com

Adi Sunderam

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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