Do intermediaries improve GSE lending? Evidence from proprietary GSE data
Year: 2025
Type: article
Abstract: We analyze the trade-offs of having intermediaries originate government-sponsored enterprise (GSE) mortgages using proprietary GSE data. We first find evidence of lenders pricing for observable and unobservable default risk independently of the GSEs. We then develop and estimate a model of competitive lending in which lenders have skin-in-the-game and conduct additional screening beyond the GSEs’ criteria. Lenders reduce costs via screening but also charge markups. On net, interest rates are higher compared to a counterfactual effectively without intermediaries. In an extension, the observed differences between banks and nonbanks are more consistent with differences in their skin-in-the-game rather than screening quality.
Source: Journal of Financial Economics
Authors: Joshua Bosshardt, Ali Kakhbod, Amir Kermani
Language: English
Topic: Housing Market and Economics
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $4,740
OpenAlex ID: W4410218386