Mortgage Availability and Homeownership in the Low Income Housing Market: The Role of Credit Scoring Technologies. (2018)
We study the role of credit scoring technologies (CSTs) in affecting the flow of capital into the low-income housing market. Local traditional banks (TBs) and remote "originate-to-distribute" non-bank lenders (NBs) compete for creditworthy non-prime borrowers. Because NBs apply CSTs based on hard credit information only, whereas TBs utilize soft as well as hard information, screening becomes increasingly lax as the NB lending sector gains market share vis-á-vis perceived improvements in CSTs. A new characterization of housing boom and bust is provided, occurring when creditworthy non-prime consumers migrate en masse into and out of the NB lending market.
Publication DateSeptember, 2018
Citation InformationJaime Luque and Timothy Riddiough. "Mortgage Availability and Homeownership in the Low Income Housing Market: The Role of Credit Scoring Technologies" . (2018)
Available at: http://works.bepress.com/luque/18/
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