The Value of Intermediaries for GSE Loans / Joshua Bosshardt, Ali Kakhbod, Amir Kermani.

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Bosshardt, Joshua

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w31575.Publication details: Cambridge, Mass. National Bureau of Economic Research 2023.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: We analyze the costs and benefits of intermediaries for government-sponsored enterprise (GSE) mortgages using regulatory data. We find evidence of lenders pricing for observable and unobservable default risk independently from the GSEs. These findings are explained using a model of competitive lending in which lenders have skin-in-the-game and acquire information beyond the GSEs' underwriting criteria, but also charge markups. We find that most borrowers are better off in a counterfactual in which the GSEs' underwriting criteria are implemented passively. Finally, the observed differences between banks and nonbanks are more consistent with differences in their skin-in-the-game rather than screening quality.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w31575 (Browse shelf(Opens below))	Not For Loan

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August 2023.

We analyze the costs and benefits of intermediaries for government-sponsored enterprise (GSE) mortgages using regulatory data. We find evidence of lenders pricing for observable and unobservable default risk independently from the GSEs. These findings are explained using a model of competitive lending in which lenders have skin-in-the-game and acquire information beyond the GSEs' underwriting criteria, but also charge markups. We find that most borrowers are better off in a counterfactual in which the GSEs' underwriting criteria are implemented passively. Finally, the observed differences between banks and nonbanks are more consistent with differences in their skin-in-the-game rather than screening quality.