Models explaining whether households choose conventional or FHA mortgage financing typically use differential insurance premiums, loan‐to‐value (LTV) and payment‐to‐income underwriting standards, and local economic conditions to explain household behavior. Using a large and geographically diverse sample, we expand the standard choice model by including measures of borrower credit history. We find that the ability of a homebuyer to avoid credit problems is an important part of the FHA–conventional choice. In addition, credit scores of FHA borrowers are worse on average than those of conventional borrowers, but as LTV increases credit scores of conventional borrowers deteriorate.

No abstract

No abstract

In the U.S., households participate in two very

No abstract

Differences in the organizational structure of CMBS loan originators may reflect differences in the incentives they face for underwriting risky loans. We treat an originator's type-that is, commercial bank, investment bank, insurance company, finance company, conduit lender, or foreign-owned entity-as a proxy for incentives related to warehousing risk, balance sheet lending, and regulatory constraints. After controlling for observable credit characteristics of over 30,000 loans securitized into CMBS after 1999, we find considerable differences in loan performance across originator types. The results suggest that moral hazard-captured by lack of warehousing risk-negatively affected the quality of loans underwritten by conduit lenders. On the other hand, despite opportunities for adverse selection, balance sheet lenders-commercial banks, insurance companies and finance companies-actually underwrote higher quality loans.

No abstract

No abstract