This paper provides evidence for a performance differential between loans with one borrower and loans with two borrowers. We argue that the choice of observables considered during the rate adjustment process may lead to mortgage mispricing for loans with co-borrowers. Our findings offer an...

In this paper we argue that because of non-linear depreciation schedules, appraisal complications, and homebuilders' significant bargaining power, loans collateralized by new construction are more likely to go into default relative to purchase loans for existing homes. Using loan-level mortgage...

Public sector employees have long been considered to be more risk-averse when compared with their private sector counterparts. Using data from mortgage applications, we offer novel evidence that casts doubt on this conventional view. After accounting for differences in applicants' demographic...

This paper uses loan-level data to investigate heterogeneity in loan prepayment incidence, and argues that refinancing is affected by a mortgage pricing convention that underestimates co-borrowers' actual creditworthiness. Specifically, we find a substantial difference in prepayment incidence...

In the aftermath of the recent financial crisis, banks should ensure that incentive compensation policies appropriately balance long-term risk with short-term rewards. Using daily output data from mortgage officers in a US commercial bank, we test the notion that nonlinear contracts create...