The Credit Scoring and Transmission Channels in the Non-Prime Mortgage Market. (2017)
We provide a theory that rationalizes how credit scoring technologies -- like the ones utilized by non-prime consumer lenders -- controlled the flow of capital into the non-prime mortgage market. The home ownership rate, the source of mortgage capital, mortgage quantities, portfolio credit quality, and house prices are all determined endogenously. Lending regimes are identified and characterized in the context of lending-house price boom and bust. Adverse selection against secondary market investors and income misrepresentation are analyzed as distortions to the transmission of credit quality information.
Publication DateSeptember, 2017
Citation InformationJaime Luque and Timothy Riddiough. "The Credit Scoring and Transmission Channels in the Non-Prime Mortgage Market" . (2017)
Available at: http://works.bepress.com/luque/18/