Marsha Courchane's paper The Pricing of Home Mortgage Loans to Minority Borrowers: How Much of the APR Differential Can We Explain? can be found in 29 Journal of Real Estate Research No. 4 (2007). Here's the abstract:
The public releases of the 2004 and 2005 HMDA data have engendered a lively debate over the pricing of mortgage credit and its implications regarding the treatment of minority mortgage borrowers. This research uses aggregated proprietary data provided by lenders and an endogenous switching regression model to estimate the probability of taking out a subprime mortgage, and annual percentage rate (APR) conditional on getting either a subprime or prime mortgage. The findings reveal that up to 90% of the African American APR gap, and 85% of the Hispanic APR gap, is attributable to observable differences in underwriting, costing, and market factors that appropriately explain mortgage pricing differentials. Although any potential discrimination is problematic and should be addressed, the analysis suggests that little of the aggregate differences in APRs paid by minority and non-minority borrowers are appropriately attributed to differential treatment.
It is beneficial to read a post from someone that knows what they are talking about and has the ability to explain it so that a person can understand it.
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Posted by: Jules Carney | Friday, August 22, 2008 at 07:22 AM
One would think a credit score was enough to determine mortgage approval. One can always dress for success and not be credit worthy. Profiling should not be a factor.
Lee
http://www.SoGettingRich.com
Posted by: Lee | Sunday, April 20, 2008 at 12:21 AM