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作者

James B. Kau;Lu Fang;Henry J. Munneke

来源

JOURNAL OF REAL ESTATE FINANCE AND ECONOMICS,Vol.59,Issue4,P.549-588

语言

英文

关键字

Mortgage discrimination;Prepayment;Default;And regulation;G21;G28;J15;R20

作者单位

Terry College of BusinessUniversity of GeorgiaAthensUSA;College of Business & EconomicsLongwood UniversityFarmvilleUSA

摘要

This study investigates whether mortgage financing regulation unintentionally leads to minorities paying a higher loan contract rate under a risk-based pricing system. We provide evidence that minority borrowers prepay less frequently than comparable non-minority borrowers and thus have lower termination risk. Racially neutral lending policies prohibit the lender from considering this reduced termination risk, resulting in a disparate impact from the overstatement of a minority borrower’s termination risk. While we find little evidence of a rate differential among borrowers under the current regulatory structure, results show minorities pay a higher rate when the variation in termination risk is recognized.