The Impact of Minority Representation at Mortgage Lenders
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.
This paper was previously circulated under the title “Minority Loan Officers and Minorities’ Access to Mortgage Credit.” For helpful comments we thank Sam Antill, Francesco D’Acunto, Will Dobbie, Mark Egan, Kristopher Gerardi, Paige Ouimet, James Vickery, and seminar participants at Brigham Young University, the University of Wisconsin–Madison, Southern Methodist University, and the Mortgage Bankers Association. We also thank conference participants at the Mid-Atlantic Research Conference in Finance and the SFS Cavalcade. The views expressed are those of the authors and not necessarily those of the Federal Reserve Bank of Dallas or any other entity within the Federal Reserve System. We are grateful to the Conference of State Bank Supervisors (CSBS) for granting us access to data from NMLS Consumer AccessSM, please see https://nmlsconsumeraccess.org/. The results and opinions are those of the authors and do not reflect the position of the CSBS. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.