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- Title
How Subprime Borrowers and Mortgage Brokers Shared the Pie.
- Authors
Berndt, Antje; Hollifield, Burton; Sandås, Patrik
- Abstract
We develop an equilibrium model for origination fees charged by mortgage brokers and show how the equilibrium fee distribution depends on borrowers' valuation for their loans and their information about fees. We use noncrossing quantile regressions and data from a large subprime lender to estimate conditional fee distributions. Given the fee distribution, we identify the distributions of borrower valuations and informedness. The level of informedness is higher for larger loans and in better educated neighborhoods. We quantify the fraction of the surplus from the mortgage that goes to the broker, and how it decreases as the borrower becomes more informed.
- Subjects
MORTGAGE brokers; ECONOMIC equilibrium; QUANTILE regression; MORTGAGE loans; ECONOMIC development
- Publication
Real Estate Economics, 2016, Vol 44, Issue 1, p87
- ISSN
1080-8620
- Publication type
Article
- DOI
10.1111/1540-6229.12087