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Deed Types, House Prices, and Mortgage Interest Rates

38 Pages Posted: 14 Aug 2006  

David M. Brasington

University of Cincinnati - Department of Economics

Robert F. Sarama

Ohio State University (OSU) - Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 11, 2006

Abstract

Deeds spell out the legal guarantees the seller makes about a house. Using a house price hedonic with a Bayesian spatial error model, we find deed types dramatically affect a house's sale price. Ten deed types command a discount and one commands a premium relative to warranty deeds. The 27% discount for guardian deeds suggests a principal-agent problem. Certain deed types appear more often in poor neighborhoods. Foreclosure deeds have lower mortgage rates than warranty deeds. The Fair Housing Act and Equal Credit Opportunity Act forbid it, but we find higher mortgage interest rates in racially heterogeneous neighborhoods.

Keywords: Mortgage Lending, House Price Hedonic, Spatial Statistics, Real Estate Law

JEL Classification: G21, K11, R31

Suggested Citation

Brasington, David M. and Sarama, Robert F., Deed Types, House Prices, and Mortgage Interest Rates (August 11, 2006). Available at SSRN: https://ssrn.com/abstract=924001 or http://dx.doi.org/10.2139/ssrn.924001

David M. Brasington (Contact Author)

University of Cincinnati - Department of Economics ( email )

Carl H. Lindner Hall 2925 Campus Green Drive
PO Box 0371
Cincinnati, OH 45221-0211
United States

Robert F. Sarama

Ohio State University (OSU) - Economics ( email )

410 Arps Hall
1945 N. High St.
Columbus, OH 43210-1172
United States

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