The CRA and Small Business Lending in LMI Areas During the Financial Crisis
Forthcoming in Selected Papers from the Small Business, Entrepreneurship, and Economic Recovery Conference | With Reid
Journal of Financial Services Research, February 2013 | With Krainer
We compare the ex ante observable risk characteristics, the default performance, and the pricing of securitized mortgage loans to mortgage loans retained by the original lender. In our sample of loans originated between 2000 and 2007, we find that privately securitized fixed and adjustable-rate mortgages were riskier ex ante than lender-retained loans or loans securitized through the government sponsored agencies. We do not find any evidence of differential loan performance for privately securitized fixed-rate mortgages. We find evidence that privately securitized adjustable-rate mortgages performed worse than retained mortgages, although other observable factors appear to be more economically important determinants of mortgage default. We do not find any evidence of a compensating premium in the loan rates for privately securitized adjustable-rate mortgages.
Journal of Housing Economics 19, September 2010, 233-42 | With Reid
The Section 184 Indian Home Loan Guarantee Program provides lenders with a 100 percent guarantee for mortgage loans to Native Americans residing on reservations belonging to tribes that have chosen to participate in the program. We find that the Section 184 program does not increase approval rates for Native Americans overall, but does for Native Americans residing on trust land. However, this result disappears once tribe fixed effects are included in the regression, suggesting that underlying tribe characteristics correlated with the adoption of Section 184 are more important influences on loan decisions than is Section 184 per se.
Journal of Competition Law and Economics 3(1), March 2007, 127-148 | With Pilloff
In this paper, we consider three issues raised by the apparent inconsistency between the current research practice of using county-based markets (Metropolitan Statistical Areas (MSAs) and non-MSA counties) to investigate the validity of the theoretical underpinnings of bank merger policy and the current regulatory practice of using Federal Reserve (FR) banking markets, which often do not follow county lines, to implement that policy. Using a national sample of bank and thrift branch deposit data, we find that county-based areas cannot simply substitute for FR markets in the implementation of bank merger policy. For example, numerous potential mergers would raise competitive issues in county-based areas, but not in FR markets, and vice versa. We also conclude that, because of the relative difficulty of assembling demographic data for non-county-based areas, it is impractical to consistently use FR markets in bank merger policy research. However, we do find that, despite the inconsistencies between the two types of markets, analysis that uses county-based areas is relevant for bank merger policy that is implemented with FR markets. For example, we find that profitability regression results using variables based on FR markets are similar to those found using variables based on MSAs and non-MSA counties.
Do Savings Associations Have a Special Commitment to Housing?
Journal of Financial Services Research 17(1), February 2000, 41-68 | With Passmore
Federal Reserve Bulletin, November 1999, 709-726 | With Canner and Passmore
Home-purchase lending to lower-income and minority households and neighborhoods has expanded significantly and at a faster rate than lending to other borrowers in recent years. Over the same period, however, an increasing proportion of applicants for conventional home-purchase mortgages, including lower-income and minority applicants, have had their applications denied. The first trend often has been taken as evidence that lenders’ efforts to expand credit availability have been successful, whereas the second trend has contributed to concerns about access to credit and the fairness of the lending process. An important but little-recognized force behind the shift of credit toward lower-income and minority borrowers has been a rapid expansion of activity by subprime and manufactured-home lenders, lenders who are oriented toward lower-income and minority households. Using data collected under the Home Mortgage Disclosure Act (HMDA) from 1993 to 1998, this article finds that part of the growth in mortgage lending and most of the increase in denial rates are associated with the substantial and growing share of mortgage activity of institutions that specialize in subprime and manufactured-home lending.