Working Paper: NBER ID: w30125
Authors: W. Scott Frame; Ruidi Huang; Erik J. Mayer; Adi Sunderam
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: minority representation; mortgage lending; credit access; racial disparities
JEL Codes: G21; G51; J15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| minority representation among loan officers (J15) | improved credit access for minority borrowers (G51) |
| minority loan officers (J15) | completion rates for minority applications (I24) |
| minority loan officers (J15) | approval rates for minority borrowers (J15) |
| minority loan officers (J15) | lower default rates for minority borrowers (J15) |
| minority loan officers (J15) | production of soft information about minority borrowers (G21) |