Competition and Risk Factors in Mortgage Lending: The Federal Housing Administration’s Evolving Role in the Primary Market
42 Pages Posted: 19 Feb 2010
Date Written: Novermber 9, 2009
Abstract
This paper presents an analysis of the distribution of home purchase mortgages insured by the Federal Housing Administration (FHA) in the primary mortgage market. Utilizing a sample of loan originations aggregated at the zip code level, the distribution of the market served by FHA and conventional lenders is compared across the State of Florida. Results indicate that FHA market shares are concentrated in zip codes with higher economic risk characteristics and obtained by high risk borrowers over the observation with evidence of market share contraction over the observation period. Unexpectedly, the analysis also reveals that FHA loan distribution fails to exhibit a targeted racial bias toward minority neighborhoods. One potential conclusion is that FHA was forced to accept lower quality loans as competition from more nimble private lenders with lower access hurdles and more rapid processing expanded into markets traditionally served by FHA.
Keywords: Residential Mortgage Markets, Public Policy, Housing, Federal Housing Administration, Affordable Housing, Housing and Urban Development
JEL Classification: G21, G28, K11, R20
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Impact of Local Predatory Lending Laws
By Giang Ho and Anthony Pennington-cross
-
State and Local Anti-Predatory Lending Laws: The Effect of Legal Enforcement Mechanisms
By Raphael W. Bostic, Kathleen C. Engel, ...
-
The Impact of Local Predatory Lending Laws on the Flow of Subprime Credit
By Giang Ho and Anthony Pennington-cross
-
How Do Predatory Lending Laws Influence Mortgage Lending in Urban Areas?
By Keith D. Harvey and Peter J. Nigro
-
A Tale of Three Markets: The Law and Economics of Predatory Lending
-
Predatory Lending Laws and the Cost of Credit
By Giang Ho and Anthony Pennington-cross
-
Predatory Lending Laws and the Cost of Credit
By Anthony Pennington-cross and Giang Ho
-
By Philip Bond, David K. Musto, ...