Sumit Agarwal of the National University of Singapore and Douglas D. Evanoff of the Chicago Fed have written Loan Product Steering in Mortgage Market. Here's the abstract:
Accusations of unscrupulous lender behavior — e.g., predatory lending — abounded during the housing boom of the 2000s. Such behavior is said to have generated significant social costs as borrowers were misled into accepting loans with inferior characteristics relative to the mortgage products that they should have qualified for. However, there is little hard evidence of such behavior and few estimates of the true effect of such behavior. Much of the research to date is based on anecdotal evidence or analyzes differential loan terms for broad groups of borrowers that are thought to have been targeted for such lending behavior. We employ a more direct methodology and test whether a particular form of this behavior existed during the housing boom: credit steering toward predatory-like loan terms. With this steering, the broker or real estate professional encourages the home buyer to access credit from a particular lender that provides the credit, but at unattractive terms. We find evidence of such behavior. That is, we find evidence consistent with lenders steering higher-quality borrowers to affiliates that provide subprime-like loans. These borrowers were charged 40-60 bps higher APR, and were 2% points less likely to default compared to similar borrowers who were not steered to such loans — consistent with the steered borrowers receiving inferior loans given their qualifications. Delving deeper, we find that the loans with steered borrowers were more likely to be privately securitized and steering was not concentrated solely among the large banks. Our results are, to our knowledge, the first explicit evidence of systematic mortgage lending abuse during the run-up in the housing markets.
Testimony on how i got my loan,
I’m a Singaporean base in the United State, I want to use this medium to alert all loan seekers to be very careful because there are scammed everywhere.
Few months ago I was financially strained, and due to my desperation I was scammed by several online lenders. I had almost lost hope until a friend of mine referred me to a very reliable lender called Mr. Lin Poh who lend me an unsecured business loan amount of US$200,000 under 24 hours without any stress, but I’ve to trust them and do what they required off me.
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I will also want you to help me pass this information to others who are also in need of a loan once you have also received your loan from Mr. Lin Poh, i pray that God should give him long life to help reliable people in needs,
Regards,
Wong Lee Young.
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