Loan sales and the tyranny of tistance in U.S. residential mortgage lending

van der Plaat, Mark (2020): Loan sales and the tyranny of tistance in U.S. residential mortgage lending.

Abstract

The distance between lenders and borrowers in the U.S. has increased considerably since the 1970s. This paper analyzes whether the use of loan sales by lenders has caused this increase. Using data on U.S. residential mortgage lending, we find that loan sales on average increase the lending distance with approximately 47%, which corresponds to 206.9 km (128.6 miles). Loan sales are able to increase lending distances because they allow lenders to reduce their loan rates, which allows them to compete for loans in remote markets. We find that loan sales almost completely offset higher loan rates of remote lenders.

• Item Type: MPRA Paper
• Language: English
• Keywords: Lending Distance; Remote Lending; Loan Sales; Securitization; Residential Mortgage Lending; Loan Rate Spreads; Great Recession; Multidimensional Panel Data
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C55 - Large Data Sets: Modeling and Analysis; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G23 - Non-bank Financial Institutions ; Financial Instruments ; Institutional Investors; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R31 - Housing Supply and Markets

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