Search Results
Journal Article
Beneath the rhetoric: clarifying the debate on mortgage lending discrimination
The authors' simple model of the mortgage underwriting process provides a framework within which to define discrimination and various notions of the default rate. By providing those with differing views a common framework for discussing their positions, the model clarifies and reconciles some of the most controversial issues in the debate over mortgage discrimination. It also shows how this theoretical framework can help in the design of practical policy responses to this vexing social problem.
Conference Paper
The importance of bank seniority for relationship lending
Journal Article
PMI reform: good intentions gone awry
An argument that the legislation aimed at making private mortgage insurance more fair and affordable for homeowners could actually hurt the very borrowers it is intended to help by restricting the availability of mortgage loans and making them more costly.
Journal Article
Measuring pricing bias in mortgages
Detecting and measuring discrimination in the pricing of mortgage loans present unique challenges for bank regulators. This Commentary outlines how loans are priced in the mortgage market and the difficulties involved in comparing the prices charged to different borrowers.
Working Paper
Protection for whom? creditor conflicts in bankruptcy
Revised. In this article we provide a rationale for bankruptcy law that is based on the conflicts among creditors that occur when a debtor?s liabilities exceed its assets. In the absence of a bankruptcy law, the private debt-collection remedies that creditors pursue when a debtor is insolvent result in an ad hoc disposal of the debtor?s assets, thereby reducing the aggregate value of creditors? claims. We show that coordination clauses can be used by creditors in their loan agreements that will result in coordination, ex post. Although all creditors would benefit from including these clauses ...
Working Paper
Anatomy of a fair-lending exam: the uses and limitations of statistics
In this paper, we consider the role of statistical analysis in fair lending compliance examinations. We present a case study of an actual examination of a large mortgage lender, demonstrating how statistical techniques can be a valuable tool focusing examiner efforts to either uncover illegal discrimination or exonerate an institution so accused. Importantly, our case also highlights the limitations of such statistical techniques. The study suggests that statistical analysis combined with comparative file review offers a balanced and thorough approach to enforcement of fair lending laws.
Journal Article
Absolute priority rule violations in bankruptcy
An examination of the impact of APR violations, demonstrating that the efficiency of such violations depends on the specific contracting problem with which a firm and its creditors are faced, and that as a result, an optimal bankruptcy institution should allow contract participants to decide ex ante whether such violations will occur.
Journal Article
Discrimination in mortgage lending: what have we learned?
A retrospective on the debate over the presence of discrimination in the residential mortgage market, examining some of the evidence that's been gathered since the Federal Reserve Bank of Boston published its 1992 study concluding that minority applicants were over 50 percent more likely to be denied a loan than whites.
Journal Article
Mortgage scoring and the myth of overrides
While many perceive a dark side to the use of overrides in the mortgage underwriting process, Stanley Longhofer of Wichita State University disagrees. This article concludes the five-part series on credit scoring and fair mortgage lending.
Working Paper
Bankruptcy rules and debt contracting: on the relative efficiency of absolute priority, proportionate priority, and first-come, first-served rules
An analysis showing that allowing creditors to "run" on a firm in financial distress is socially valuable, since it compensates them for monitoring the firm's condition; in contrast, strict adherence to absolute and proportionate priority rules allows lenders to free ride on the monitoring efforts of others, exacerbating the firm's moral hazard problem.