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Working Paper

The Impact of Minority Representation at Mortgage Lenders


Abstract: 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.

Keywords: mortgages; race; loan officers; approval; default;

JEL Classification: G21; G51; J15;

https://doi.org/10.24149/wp2207

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File(s): File format is application/pdf https://www.dallasfed.org/-/media/documents/research/papers/2022/wp2207.pdf
Description: Full text

Authors

Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Working Papers

Publication Date: 2022-06-21

Number: 2207