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Explaining the Growth of Higher-Priced Loans in HMDA: A Decomposition Approach

Author

Listed:
  • Chau Do

    (Department of Treasury, Office of the Comptroller of the Currency, Washington, DC 20219)

  • Irina Paley

    (Department of Treasury, Office of the Comptroller of the Currency, Washington, DC 20219)

Abstract

The period 2004?005 showed a significant increase in Home Mortgage Disclosure Act (HMDA) rate spread reporting. Following the Oaxaca (1973), Blinder (1973), and Fairlie (2005) decomposition techniques, this study identifies the fraction of the increase due to the flattening of the yield curve. Even after controlling for changes in borrower risk characteristics, the findings reveal that during 2004?006, the flattening of the yield curve explains a significant amount of the increase in rate spread reportable loans. This is the case for both prime and subprime originations.

Suggested Citation

  • Chau Do & Irina Paley, 2007. "Explaining the Growth of Higher-Priced Loans in HMDA: A Decomposition Approach," Journal of Real Estate Research, American Real Estate Society, vol. 29(4), pages 441-478.
    • Handle: RePEc:jre:issued:v:29:n:4:2007:p:441-478
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    References listed on IDEAS

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    1. Mitchell Stengel & Dennis Glennon, 1999. "Evaluating Statistical Models of Mortgage Lending Discrimination: A Bank‐Specific Analysis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 27(2), pages 299-334, June.
    2. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    3. Michael LaCour-Little, 2007. "Economic Factors Affecting Home Mortgage Disclosure Act Reporting," Journal of Real Estate Research, American Real Estate Society, vol. 29(4), pages 479-510.
    4. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
    5. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    6. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
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    2. Lisa Kaida, 2015. "Ethnic Variations in Immigrant Poverty Exit and Female Employment: The Missing Link," Demography, Springer;Population Association of America (PAA), vol. 52(2), pages 485-511, April.
    3. Kristin L. Perkins, 2009. "The geography of foreclosure in Contra Costa County, California," Community Development Working Paper 2009-03, Federal Reserve Bank of San Francisco.

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