Nonlocal mortgage lending and the secondary market involvement
This paper documents that out-of-state nonlocal mortgages, originated by statechartered banks, are more likely to be subprime (high-priced) loans and are sold more to the secondary market than other types of mortgages, based on the data collected under the Home Mortgage Disclosure Act from 2005 to 2...
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| Main Authors: | , |
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| Other Authors: | |
| Format: | Article |
| Language: | English |
| Published: |
2014
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10356/106460 http://hdl.handle.net/10220/24015 http://www3.ntu.edu.sg/home/jpzhang/xz_JERL.pdf |
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| Institution: | Nanyang Technological University |
| Language: | English |
| Summary: | This paper documents that out-of-state nonlocal mortgages, originated by statechartered banks, are more likely to be subprime (high-priced) loans and are sold more to the secondary market than other types of mortgages, based on the data collected under the Home Mortgage Disclosure Act from 2005 to 2008. We find that the demand for nonlocal mortgages is larger in the neighborhood where the denial rate of mortgage applications to local banks is higher, suggesting that the borrowers of nonlocal mortgages are less creditworthy. Furthermore, a bank makes more nonlocal mortgages to out-of-state borrowers if it is involved more in the secondary market. |
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