The Impact of Minority Representation at Mortgage Lenders
72 Pages Posted: 10 Mar 2022 Last revised: 7 Jul 2022
Date Written: October 19, 2021
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: Suggested Citation