Mortgage Rates and Loan Limits

Paper Summary:

The in-depth research performed for the study finds that risk-based pricing policies had a positive impact on the extension of residential mortgages to low- and moderate-income applicants making less than $35,000 annually, in that rejection rates associated with risk-based factors declined. The research also finds that higher mortgage limit policies had a positive impact on the extension of residential mortgages to low- and moderate-income applicants making less than $35,000 annually, in that rejection rates associated with risk-based factors declined. Lastly, the research results indicate that higher mortgage limit policies had a greater positive impact than did risk-based pricing policies.
The findings that both risk-based pricing policies and higher mortgage limit policies have positive impacts on the extension of residential mortgages to low- and moderate-income applicants making less than $35,000 annually, also showed that mortgage approval rates for this group actually declined over the period of analysis. The implication of these findings considered together is that other problems exist that have led to the rejection of low- and moderate-income applicants making less than $35,000 annually, for residential mortgages.
The major conclusion drawn from the findings of this study is that adherence to risk-based pricing policies and increased mortgage loan limit policies by conventional lenders is more show than real, as the aggregate approval rate among conventional lenders actually declined from 1990 to 1999. Thus, it appears that conventional lenders have found new reasons to reject low- and moderate-income applicants making less than $35,000 annually, while publicly adhering to the new policies intended to broaden access to mortgage lending for these applicants.

TABLE OF CONTENTS
1 - Introduction
Problem Statement
Study Purpose
Research Questions & Hypotheses
Significance of the Study
Definitions of Terms
Delimitations of the Study
Overview of the Remainder of the Study
2 ? Review of the Literature
Systems Theory
Systems Theory and the Mortgage Lending Model
Mortgage Lending Markets
Past Discrimination in Mortgage Lending
Summary
3 ?Methodology
Research Design
Research Hypotheses
Variables and Operational Definitions
Data Collection
Data Analysis
Methodological Limitations
Summary
4 ?Results
Restatement of the Research Questions
Restatement of the Hypotheses
Research Results
5 ? Summary, Discussion and Conclusions
Discussion
Conclusions
Appendix: Data Tables
Bibliography

From the Paper:

"The effort to improve accessibility to residential mortgage finance for low- and moderate-income individuals and families making less than $35,000 annually, tends to be impeded by a system that has become entrenched. This existing system is an interlocking structure of public and private sector players that has developed rules and processes with which they are comfortable and which they are reluctant to change. The existing system for the extension of residential mortgages also involves both the primary and the secondary mortgage markets, as well as credit review and reporting agencies. The system in place was never intended to provide access to residential mortgages to low- and moderate-income persons making less than $35,000 annually, except within the framework of specific governmental programs targeting such individuals. These specific programs involved direct public funding, government guaranteed repayment of loans extended by private sector lenders, or subsidies to developers and builders."

More papers on Mortgage Rates and Loan Limits:

• Essay # 26897 : "Mortgage Approval Rates for Low and Moderate Income Households"
• Research Paper # 28155 : "Programs to Overcome Mortgage Lending Discrimination"
• Research Paper # 26386 : "Mortgage Loan Rates"

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