The Impact of Minority Representation at Mortgage Lenders

73 Pages Posted: 23 Jun 2022

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

Adi Sunderam

Harvard University - Business School (HBS)

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.

Keywords: mortgages, race, loan officers, approval, default

JEL Classification: G21, G51, J15

Suggested Citation

Frame, W. Scott and Huang, Ruidi and Mayer, Erik J. and Sunderam, Adi, The Impact of Minority Representation at Mortgage Lenders (June, 2022). FRB of Dallas Working Paper No. 2207, Available at SSRN: https://ssrn.com/abstract=4144102 or http://dx.doi.org/10.24149/wp2207

W. Scott Frame (Contact Author)

Structured Finance Association ( email )

1776 I Street NW
#501
Washington, DC 20006
United States

Ruidi Huang

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

United States

Erik J. Mayer

University of Wisconsin-Madison, Finance Department ( email )

975 University Avenue
Madison, WI 53706
United States

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

Adi Sunderam

Harvard University - Business School (HBS) ( email )

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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
48
Abstract Views
373
PlumX Metrics