Search Results
Working Paper
Absolute priority rule violations, credit rationing, and efficiency
A demonstration that violations of the absolute priority rule exacerbate credit rationing problems by reducing the payment lenders receive in default states.
Journal Article
Mortgage brokers and fair lending
Mortgage brokers play an important role in the housing finance market, but they also present unique challenges to regulators attempting to enforce fair lending laws. Should lenders be held responsible for the pricing decisions of brokers from whom they receive loan applications, or should fair lending laws instead be applied directly to the brokers themselves?
Working Paper
A note on absolute priority rule violations, credit rationing, and efficiency
An argument that APR violations exacerbate credit rationing problems by reducing the payment lenders receive in default states.
Journal Article
Cultural affinity and mortgage discrimination
Working Paper
The importance of bank seniority for relationship lending
The authors examine two aspects of a bank's interaction with its borrowers--the relative priority of bank debt and the role of banks as "relationship lenders." They show that making the bank senior improves its incentives to build a relationship with the firm, thereby fulfilling an important function of intermediated debt.
Working Paper
Bankruptcy rules and debt contracting: on the relative efficiency of absolute priority, proportionate priority, and first-come, first-served rules
An analysis showing that allowing creditors to "run" on a firm in financial distress is socially valuable, since it compensates them for monitoring the firm's condition; in contrast, strict adherence to absolute and proportionate priority rules allows lenders to free ride on the monitoring efforts of others, exacerbating the firm's moral hazard problem.
Journal Article
Beneath the rhetoric: clarifying the debate on mortgage lending discrimination
The authors' simple model of the mortgage underwriting process provides a framework within which to define discrimination and various notions of the default rate. By providing those with differing views a common framework for discussing their positions, the model clarifies and reconciles some of the most controversial issues in the debate over mortgage discrimination. It also shows how this theoretical framework can help in the design of practical policy responses to this vexing social problem.
Journal Article
PMI reform: good intentions gone awry
An argument that the legislation aimed at making private mortgage insurance more fair and affordable for homeowners could actually hurt the very borrowers it is intended to help by restricting the availability of mortgage loans and making them more costly.
Journal Article
Measuring pricing bias in mortgages
Detecting and measuring discrimination in the pricing of mortgage loans present unique challenges for bank regulators. This Commentary outlines how loans are priced in the mortgage market and the difficulties involved in comparing the prices charged to different borrowers.