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Report
How do people pay rent?
Using data from the 2014 Boston Fed Bill Payment Experiment and the 2014 Survey of Consumer Payment Choice (SCPC), we investigate how households pay their rent. We find that the dominant methods for paying rent are cash (22 percent), check (42 percent), and money order (16 percent). Electronic methods are still rarely used, at 8 percent for bank account number payment and 7 percent for online banking bill payment, and less than 2 percent for debit and credit cards. Compared with other large bill payments of more than $200, rental payments are much more likely to be made with paper-based ...
Working Paper
Mortgage Prepayment, Race, and Monetary Policy
This paper documents large differences in mortgage prepayment behavior across racial and ethnic groups in the United States, which have significant implications for monetary policy, inequality, and pricing. Using a novel data set that combines administrative data on mortgage performance with information on race and ethnicity, we show that Black and Hispanic white borrowers have significantly lower prepayment rates compared with Non-Hispanic white borrowers, holding income, credit score, and equity constant. This gap is on the order of 50 percent and largely reflects different sensitivities ...
Working Paper
Mortgage Prepayment, Race, and Monetary Policy
During the period 2005 to 2020, Black borrowers with mortgages insured by Fannie Mae or Freddie Mac paid interest rates that were almost 50 basis points higher than those paid by non-Hispanic white borrowers. We show that the main reason is that non-Hispanic white borrowers are much more likely to exploit periods of falling interest rates by refinancing their mortgages or moving. Black and Hispanic white borrowers face challenges refinancing because, on average, they have lower credit scores, equity, and income. But even holding those factors constant, Black and Hispanic white borrowers ...
Working Paper
Do Lenders Still Discriminate? A Robust Approach for Assessing Differences in Menus
We use a new methodology to assess mortgage pricing discrimination faced by minority borrowers. We identify a “menu problem” that comes from the multidimensional nature of mortgage pricing: When getting a mortgage, borrowers can choose to avoid closing costs and pay a high interest rate or contribute to closing costs to get a lower rate. While data on both dimensions of mortgage pricing are by now often available, intuitively attractive metrics of lender pricing discrimination used in the literature can lead to both false and contradictory results. For example, it is sometimes observed ...