This paper studies the effects of mortgage subsidies and imperfect competition in the U.S. mortgage market. I exploit … relationship between mortgage subsidies, intermediary lenders' market power, and borrower's advantageous selection. The model shows … that mortgage subsidies enable advantageous selection, creating a deadweight loss of $7.90 billion. Counterfactual analysis …

, and its relationship with mortgage default. We find that lender effort to collect soft information is intertwined with …