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Journal Article
The 2007 HMDA data
Working Paper
Does credit scoring produce a disparate impact?
The widespread use of credit scoring in the underwriting and pricing of mortgage and consumer credit has raised concerns that the use of these scores may unfairly disadvantage minority populations. A specific concern has been that the independent variables that comprise these models may have a disparate impact on these demographic groups. By "disparate impact" we mean that a variable's predictive power might arise not from its ability to predict future performance within any demographic group, but rather from acting as a surrogate for group membership. Using a unique source of data that ...
Journal Article
The 2008 HMDA data: the mortgage market during a turbulent year
The data that mortgage lending institutions reported for 2008 under the Home Mortgage Disclosure Act of 1975 (HMDA) reflect the ongoing difficulties in the housing and mortgage markets. This article presents a number of key findings from a review of the 2008 HMDA data. In particular, it documents a reduction in lending activity that was experienced by all groups of borrowers, highlights the Federal Housing Administration's greatly expanded role in the mortgage market, and examines how atypical changes in the interest rate environment affected the incidence of reported higher-priced lending in ...
Working Paper
Credit card redlining revisited
Using a proprietary dataset of credit bureau records, Cohen-Cole (2008) finds that banks set credit limits on revolving accounts based in part on the racial composition of the neighborhood in which each borrower resides. This paper evaluates the evidence presented in that working paper using the same proprietary database of credit bureau records. The replication effort presented in this paper suggests that decisions about how to calculate the variables used in that study may have resulted in the unnecessary exclusion of one-fifth of available observations from the estimation samples and may ...
Working Paper
Commercial lending and distance: evidence from Community Reinvestment Act data
Innovations such as credit scoring have increased the ability of banks to lend to distant business borrowers, which could expand the geographic market for small business loans. However, if this effect is limited to a few large banks, the market may become segmented and lending distance at local banks actually decreases. This paper, using a new data source and a spatial econometric model, empirically estimates the relationship between distance and commercial lending and how this relationship is evolving over time. We find distance is negatively associated with the likelihood of a local ...
Working Paper
Foreclosure's wake: the credit experiences of individuals following foreclosure
While a substantial literature has examined the causes of mortgage foreclosure, there has been relatively little work on the consequences of foreclosure for the borrowers themselves. Using a large sample of anonymous credit bureau records, observed quarterly from 1999Q1 through 2010Q1, we examine the credit experiences of almost 350,000 borrowers before and after their mortgage foreclosure. Our analysis documents the substantial declines in credit scores that accompany foreclosure and examines the length of time it takes individuals to return their credit scores to pre-delinquency levels. The ...
Journal Article
The 2006 HMDA data
Analyzes the 2006 data collected under the Home Mortgage Disclosure Act (HMDA). The review focuses primarily on the pricing information in the data. Includes an assessment of factors that account for the variation in rates of serious delinquency on mortgage loans across U.S. metropolitan area counties observed as of March 31, 2007, with information drawn from the HMDA data on the incidence of higher-priced lending and from credit scores by geographic area.
Working Paper
Is Lending Distance Really Changing? Distance Dynamics and Loan Composition in Small Business Lending
Has information technology improved small businesses' access to credit by hardening the information used in loan underwriting and reducing the importance of proximity to lenders? Previous research, pointing to increasing average lending distances, suggests that it has. But this conclusion can obscure differences across loans and lenders. Using over 20 years of Community Reinvestment Act data on small business lending, we find that while average distances have increased substantially, distances at individual banks remain unchanged. Instead, average distance has increased because a small group ...
Working Paper
The subprime crisis: Is government housing policy to blame?
A growing literature suggests that housing policy, embodied by the Community Reinvestment Act (CRA) and the affordable housing goals of the government sponsored enterprises, may have caused the subprime crisis. The conclusions drawn in this literature, for the most part, have been based on associations between aggregated national trends. In this paper we examine more directly whether these programs were associated with worse outcomes in the mortgage market, including delinquency rates and measures of loan quality. We rely on two empirical approaches. In the first approach, which focuses on ...