Minority Loan Officers and Minorities’ Access to Mortgage Credit

We study the relationship between the labor market for loan officers and access to credit in the residential mortgage market. Using novel data matching the (near) universe of mortgage applications to loan officers, we find that minorities are significantly underrepresented among mortgage loan officers. Minority borrowers are less likely to complete mortgage applications, have completed applications approved, and to ultimately take-up a loan. However, these disparities are significantly reduced when minority borrowers work with minority loan officers. In addition, minority borrowers working with minority loan officers have lower default rates. These findings are robust to granular controls and fixed effects, as well as an instrumental variables strategy that provides exogenous variation in the matching of borrowers with loan officers. Overall, our results suggest that the underrepresentation of minorities among loan officers has an adverse effect on minority borrowers’ access to credit