The Impact of Minority Representation at Mortgage Lenders

73 Pages Posted: 13 Jun 2022 Last revised: 24 Apr 2023

See all articles by W. Scott Frame

W. Scott Frame

Structured Finance Association

Ruidi Huang

Southern Methodist University (SMU) - Finance Department

Erik J. Mayer

University of Wisconsin-Madison, Finance Department

Aditya Sunderam

Harvard University

Multiple version iconThere are 3 versions of this paper

Date Written: June 2022

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.

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Suggested Citation

Frame, W. Scott and Huang, Ruidi and Mayer, Erik J. and Sunderam, Aditya, The Impact of Minority Representation at Mortgage Lenders (June 2022). NBER Working Paper No. w30125, Available at SSRN: https://ssrn.com/abstract=4134921 or http://dx.doi.org/10.2139/ssrn.4134921

W. Scott Frame (Contact Author)

Structured Finance Association ( email )

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Ruidi Huang

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

United States

Erik J. Mayer

University of Wisconsin-Madison, Finance Department ( email )

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Madison, WI 53706
United States

HOME PAGE: http://https://sites.google.com/site/erikjmayer/

Aditya Sunderam

Harvard University ( email )

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