Research Interests: Financial Intermediation, Household Finance, Real Estate Finance
Job Market Paper: The Market Structure of Mortgage Broker Sector: Implications for Credit Quality
Abstract:Mortgage brokers originate a large share of residential real estate lending, their growth and changes to their market structure have a significant impact on lending standards. In this paper, using data from a major mortgage lender in the run up to the financial crisis, I construct measures of local market structure of the mortgage broker sector including their size distribution and competitiveness. Exploiting state-level regulatory changes to local entry costs I am able to study the effect of mortgage broker sector market structure on credit quality. My results suggest that decreased concentration and the reduced entry of lower quality brokers have a significant impact on lending standards. Increases in broker concentration and increases in average broker size lead to lower loan to value ratio's, higher credit scoring borrowers and a decrease in riskier mortgage products.
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