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Is mortgage lending by savings associations special?

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In this paper, we investigate whether elimination of the savings association charter might reduce lending to \"nontraditional\" (e.g., low-income) mortgage borrowers. We present a theoretical model of lender portfolio choice, in which nontraditional lenders have some market power and traditional lenders are price-takers in the mortgage market. The comparative statics indicate differences between nontraditional and traditional lenders in terms of their asset allocation responses to changes in borrower income and house prices. Empirical tests indicate the absence of such differences between savings associations and commercial banks, suggesting that elimination of the savings association charter would not impair lending to nontraditional mortgage borrowers.

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  • Elizabeth Laderman & Wayne Passmore, 1998. "Is mortgage lending by savings associations special?," Economic Review, Federal Reserve Bank of San Francisco, pages 30-46.
  • Handle: RePEc:fip:fedfer:y:1998:p:30-46:n:2
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    1. Jeremy C. Stein, 1993. "Prices and Trading Volume in the Housing Market: A Model with Downpayment Effects," NBER Working Papers 4373, National Bureau of Economic Research, Inc.
    2. Blinder, Alan S & Stiglitz, Joseph E, 1983. "Money, Credit Constraints, and Economic Activity," American Economic Review, American Economic Association, vol. 73(2), pages 297-302, May.
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    4. Elizabeth Laderman & Wayne Passmore, 1998. "Is mortgage lending by savings associations special?," Economic Review, Federal Reserve Bank of San Francisco, pages 30-46.
    5. Wayne Passmore, 1991. "Can retail depositories fund mortgages profitably?," Finance and Economics Discussion Series 175, Board of Governors of the Federal Reserve System (U.S.).
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    9. Jeremy C. Stein, 1995. "Prices and Trading Volume in the Housing Market: A Model with Down-Payment Effects," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 379-406.
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    11. James R. Barth, 1991. "The Great Savings and Loan Debacle," Books, American Enterprise Institute, number 918256, September.
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    1. Elizabeth Laderman & Wayne Passmore, 1998. "Is mortgage lending by savings associations special?," Economic Review, Federal Reserve Bank of San Francisco, pages 30-46.

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    Keywords

    Mortgages; Savings and loan associations;

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