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  • 2015
  • Mimeo

Market Power in Mortgage Lending and the Transmission of Monetary Policy

By: David S. Scharfstein and Adi Sunderam
We present evidence that high concentration in mortgage lending reduces the sensitivity of mortgage rates and refinancing activity to mortgage-backed security (MBS) yields. We isolate the direct effect of concentration and rule out alternative explanations in two ways.... View Details
Keywords: Mortgage Lending; Market Power; Monetary Policy Transmission; Mortgages; Banking Industry; United States
Related
  • Other Article

Should You Refinance Your Mortgage with Your Current Lender?

By: David Hao Zhang
Keywords: Mortgage Lending; Mortgages
Related

    Market Power in Mortgage Lending and the Transmission of Monetary Policy

    We present evidence that high concentration in mortgage lending reduces the sensitivity of mortgage rates and refinancing activity to mortgage-backed security (MBS) yields. We isolate the direct effect of concentration and rule out alternative explanations in two ways.... View Details
    • October 2019
    • Article

    Partial Deregulation and Competition: Effects on Risky Mortgage Origination

    By: Marco Di Maggio, Amir Kermani and Sanket Korgaonkar
    We exploit the OCC's preemption of national banks from state laws against predatory lending as a quasi-experiment to study the effect of deregulation and its interaction with competition on the supply of complex mortgages. Following the preemption ruling, national... View Details
    Keywords: Great Recession; Subprime; Complex Mortgages; Credit Supply; Household Debt; Preemption Rule; Competition; Mortgages; Government Legislation; Credit; Financial Crisis
    Related
    • 20 Oct 2015
    • News

    This could be the next 'subprime mortgage crisis'

    • Article

    The Harmonization of Lending Standards within Banks through Mandated Loan-Level Transparency

    By: Jung Koo Kang, Maria Loumioti and Regina Wittenberg-Moerman
    We explore whether the introduction of transparent reporting rules increases credit standard harmonization within a bank. We exploit the new loan-level reporting rules imposed on banks that borrow from the European Central Bank using repurchase agreements... View Details
    Keywords: Transparency; External And Internal Reporting; Credit Term Harmonization; Regulatory Scrutiny; Banks and Banking; Credit; Financial Reporting; Governing Rules, Regulations, and Reforms; Learning
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    • 11 Oct 2022
    • Research & Ideas

    Shrinking the Racial Wealth Gap, One Mortgage at a Time

    and approved, but when minority loan officers shepherd those applications, approval rates increase significantly, says Adi Sunderam, the Willard Prescott Smith Professor of Corporate Finance at Harvard Business School, in the working paper, “The Impact of Minority... View Details
    Keywords: by Rachel Layne; Financial Services
    • March 2013
    • Case

    NovaStar Financial: A Short Seller's Battle

    By: Suraj Srinivasan and Amy Kaser
    The NovaStar case describes the challenges faced by short seller Marc Cohodes of hedge fund Rocker Partners as he tried to expose what he thought was widespread fraud in mortgage lender NovaStar Financial. The case is set in the time period from 2001 to 2007 and tracks... View Details
    Keywords: Short Selling; Financial Accounting; Financial Analysis; Financial Analysts; Valuation; Business Analysis; Financial Statement Analysis; Financial Statements; Securitization; Securities Analysis; Fraud; Accounting Quality; Accounting Red Flags; Accounting Restatements; Hedge Fund; Hedge Funds; Accounting Scandal; Accounting Fraud; Financial Crisis; Financial Intermediaries; Financial Firms; Corporate Accountability; Subprime Lending; Mortgage Lending; Accounting; Accrual Accounting; Fair Value Accounting; Governance; Governance Compliance; Corporate Governance; Governance Controls; Financial Services Industry; United States; California
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    • February 2018
    • Supplement

    Robert K. Steel at Wachovia (B)

    By: Gautam Mukunda, Nien-hê Hsieh and David Lane
    In September 2008, Robert Steel presided over the sale of Wachovia, a top U.S. bank, less than three months after becoming its CEO. Wachovia’s exposure to risky home loans led depositors and creditors to flee the bank on Friday, September 26, after the FDIC seized and... View Details
    Keywords: Leadership; Financial Crisis; Robert Steel; Wachovia; Sheila Bair; Richard Kovacevich; Wells Fargo; Vikram Pandit; Citigroup; FDIC; Tim Geithner; Mortgage Lending; Contagion; Mergers And Acquisitions; Financial Services; Banking; Decision Making; Ethics; Fairness; Finance; Leadership Style; Crisis Management; Management Style; Risk Management; Negotiation; Business and Stakeholder Relations; Banking Industry; United States
    Related
    • February 2018
    • Case

    Robert K. Steel at Wachovia (A)

    By: Gautam Mukunda, Nien-hê Hsieh and David Lane
    In September 2008, Robert Steel presided over the sale of Wachovia, a top U.S. bank, less than three months after becoming its CEO. Wachovia’s exposure to risky home loans led depositors and creditors to flee the bank on Friday, September 26, after the FDIC seized and... View Details
    Keywords: Leadership; Financial Crisis; Robert Steel; Wachovia; Sheila Bair; Richard Kovacevich; Wells Fargo; Vikram Pandit; Citigroup; FDIC; Tim Geithner; Mortgage Lending; Contagion; Mergers And Acquisitions; Financial Services; Banking; Decision Making; Ethics; Fairness; Finance; Leadership Style; Crisis Management; Management Style; Risk Management; Negotiation; Business and Stakeholder Relations; Banking Industry; United States
    Related
    • January 1993 (Revised November 1997)
    • Case

    BayBank Boston

    In 1992, the Federal Reserve released a study of mortgage lending patterns in Boston. It concluded that even when credit factors were taken into account, black and Hispanic applicants experienced higher rejection rates. Richard Pollard, chairman of BayBank Boston, had... View Details
    Keywords: Prejudice and Bias; Ethics; Race; Mortgages; Banking Industry; Boston
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    • November 2017
    • Article

    Credit-Induced Boom and Bust

    By: Marco Di Maggio and Amir Kermani
    Can a credit expansion induce a boom and bust in house prices and real economic activity? This paper exploits the federal preemption of national banks in 2004 from local laws against predatory lending to gauge the effect of the supply of credit on the real economy.... View Details
    Keywords: Great Recession; Subprime; Credit Supply; Credit Expansion; Household Leverage; Household Debt; Preemption Rule; Mortgages; Laws and Statutes; Credit; Household; Borrowing and Debt; Economic Slowdown and Stagnation
    Related

      How Quantitative Easing Works: Evidence on the Refinancing Channel

      When LSAPs are needed the most, simply bending the yield curve through purchasing government debt is not effective for stimulating the mortgage market (a key sector of the economy for the transmission of monetary policy). Purchasing mortgage-backed... View Details

      • 13 Aug 2012
      • Research & Ideas

      When Good Incentives Lead to Bad Decisions

      Among the culprits contributing to the recent financial crisis were bank loan officers who approved mortgage loans that were doomed to fail. Many of these frontline workers were motivated by bonuses and other incentives to approve... View Details
      Keywords: by Carmen Nobel; Banking
      • 25 Aug 2009
      • News

      An Ounce of Prevention

      • 26 Apr 2011
      • First Look

      First Look: April 26

      April 2002, started providing its branch managers with customer lifetime value (CLV) information about mortgage applicants. The data allow us to gauge the effects of enriching the information set of these employees in an environment where... View Details
      Keywords: Sean Silverthorne
      • 01 Oct 2009
      • Working Paper Summaries

      Systemic Risk and the Refinancing Ratchet Effect

      Keywords: by Amir E. Khandani, Andrew W. Lo & Robert C. Merton; Construction; Real Estate
      • 28 May 2013
      • First Look

      First Look: May 28

      widespread fraud in mortgage lender NovaStar Financial. The case is set in the time period from 2001 to 2007 and tracks the growth of the subprime industry and its collapse leading to the financial crisis. The case describes the business... View Details
      Keywords: Sean Silverthorne
      • 2022
      • Working Paper

      House Prices, Home Equity and Entrepreneurship: Evidence from U.S. Census Micro Data

      By: Sari Pekkala Kerr, William R. Kerr and Ramana Nanda
      During 1992-2007, house price growth is strongly correlated with local entrepreneurship. We show with Census Bureau data that most of this entry is related to construction and real estate; these entrants tend to be small and short-lived. Using a 1998 Texas reform that... View Details
      Keywords: House Prices; Collateral Channel; Entry; Demography; Mortgages; Entrepreneurship
      Related
      • 21 Jul 2010
      • Research & Ideas

      HBS Faculty Debate Financial Reform Legislation

      from auto dealers, retail stores, and real estate brokers). Finally, Congress missed the main cause of the financial crisis—Fannie Mae, Freddie Mac, and the housing agencies. Given the fragility of the U.S. housing markets, Congress was unwilling to reform these View Details
      Keywords: by Staff