NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Loan Product Steering in Mortgage Markets

Sumit Agarwal, Gene Amromin, Itzhak Ben-David, Douglas D. Evanoff

NBER Working Paper No. 22696
Issued in September 2016
NBER Program(s):CF

We present evidence of a particular type of loan steering in which lenders lead borrowers to take out high margin mortgage products. We identify this activity by comparing borrowers who were rejected by lenders but were subsequently approved by their affiliates (steered borrowers) to other initially rejected borrowers who obtained loans elsewhere. Although steered borrowers default less, they pay significantly higher interest rates and are more likely to borrow through contracts with unconventional features, such as negative amortization or prepayment penalties. Female borrowers, single borrowers with no co-signers, and borrowers in low-income locations are more likely to be steered.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w22696

Users who downloaded this paper also downloaded* these:
Stiglitz w22837 The Theory of Credit and Macro-economic Stability
Ozcan and Greenstein w22631 Technological Leadership (de)Concentration: Causes in ICTE
Stomberg w22912 Drug Shortages, Pricing, and Regulatory Activity
Gowrisankaran, Joiner, and Lin w22873 Does Health IT Adoption Lead to Better Information or Worse Incentives?
Papageorge, Pauley, Cohen, Wilson, Hamilton, and Pollak w22887 Health, Human Capital and Domestic Violence
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us