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MORTGAGE LENDING TO MINORITIES: WHERE'S THE BIAS?
Author(s) -
DAY THEODORE E.,
LIEBOWITZ S. J.
Publication year - 1998
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1998.tb01692.x
Subject(s) - underwriting , unintended consequences , default , shared appreciation mortgage , mortgage underwriting , economics , actuarial science , racism , mortgage insurance , political science , finance , law , casualty insurance , insurance policy
This paper examines mortgage lending and concludes that studies based on data created by the Boston Fed should be reevaluated. A detailed examination of these data indicates that irregularities in these data, when combined with the most commonly used research methodology, appear to have biased previous research toward a finding of discrimination against minority applicants. When the most severe data irregularities are eliminated, evidence to support a hypothesis of discrimination disappears. The currently fashionable “flexible” underwriting standards of mortgage lenders may have the unintended consequences of increasing defaults for the “beneficiaries” of these policies. (JEL J7, G28)