Mortgage brokers originate a large share of residential real estate lending. Exploiting state-level regulatory changes to local entry costs I am able to study the effect on credit quality and access. Using data from a major mortgage lender in the run up to the financial crisis I study how the the mortgage broker sector credit standards are impacted by this regulatory change. Over all in response to tightening regulation I observe an improvement in credit quality in the form of lower debt to income ratios, loan to value ratios and higher average credit scores. There is also a drop certain kinds of riskier mortgage products and overall delinquency rates. These benefits must be weighed against a small reduction credit supply that has a disproportionate effect on low income borrowers and racial minorities. In the second chapter, using data from a major mortgage lender in the run up to the financial crisis, I study how the market structure and composition of the mortgage broker sector responds variation in sector entry costs. My results show that the market responds with decreased concentration and the exit of smaller brokers. This also has implications for lending as the impact heterogenous and broker specializing in lower credit quality mortgages are more likely to exit the market. The final chapter examines how private sector firms attempt to minimize foreclosures while dealing with the resolution of defaulted mortgages. Our proprietary data comes from a mortgage modification specialists whose ultimate aim is to keep borrowers in their property in spite of severe delinquency. We show that despite this objective the specialist has a surprisingly low success rate. We present a model to understand the sources of difficulty to achieve successful mortgage resolutions. This research has implications not just for the private sector but for public policies designed to minimize delinquencies after financial crises.

Creator

• Stephenson, Harvey Hugh

DOI

• https://doi.org/10.21985/n2-s4cq-pt49

Subject

• Finance

Language

• en

Alternate Identifier

• http://dissertations.umi.com/northwestern:14642
• etdadmin_upload_662464

Date created

• 2019-01-01

Resource type

• Dissertation

Rights statement

• In Copyright