What Broker Charges Reveal About Subprime Mortgage Credit Risk
Prior to the subprime crisis, mortgage brokers charged higher fees for subprime loans that turned out to be riskier ex post, even when conditioning on other risk characteristics. Borrowers who paid higher conditional fees were inherently more risky, not just because they paid higher fees. The associ...
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| Veröffentlicht in: | The journal of real estate finance and economics 2021-08, Vol.63 (2), p.280-326 |
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| container_title | The journal of real estate finance and economics |
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| creator | Berndt, Antje Hollifield, Burton Sandås, Patrik |
| description | Prior to the subprime crisis, mortgage brokers charged higher fees for subprime loans that turned out to be riskier ex post, even when conditioning on other risk characteristics. Borrowers who paid higher conditional fees were inherently more risky, not just because they paid higher fees. The association between conditional fees and delinquency risk was stronger for purchase rather than refinance loans, and for loans originated by brokers who had less frequent interactions with the lender. This work sheds light on how regulation that limits origination charges to a fixed fraction of the loan amount may impact mortgage lending. |
| doi_str_mv | 10.1007/s11146-020-09774-5 |
| format | Article |
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| issn | 0895-5638 1573-045X |
| language | eng |
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| source | SpringerNature Journals; EBSCOhost Business Source Complete |
| subjects | Conditioning Contingent fees Credit risk Economics Economics and Finance Fees & charges Financial Services Loans Mortgages Regional/Spatial Science Subprime lending |
| title | What Broker Charges Reveal About Subprime Mortgage Credit Risk |
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