The Drivers of Discrimination in Mortgage Lending
||Oladiran, Olayiwola Oladipo
||The Drivers of Discrimination in Mortgage Lending
||24th Annual European Real Estate Society Conference in Delft, Netherlands
||Housing is indisputably a key need that man needs to and aims to satisfy. However, satisfying this core human need requires huge capital outflow. Thus, intending homeowners rely on mortgage finance which is a suitable and viable option for buying their homes by making installment payment over a long period of time. Based on the important role of mortgage finance in satisfying this need, it is logical to infer that any intentional or implicit action or inaction that prevents an individual or group from accessing mortgage facilities is tantamount to a denial of their civil right, social opportunity, and a preclusion from homeownership.There is, however, substantial evidence that discrimination exists in mortgage lending. Literature typically classifies discrimination in the mortgage market on the basis of gender, race, geographical location, and age and suggest that mortgage discrimination is driven by either intentional or instinctive factors. While traditional research describe mortgage lending discrimination using the Becker’s differential treatment or taste-based theory and Arrow and Phelps’s statistical discrimination theory, contemporary research appear to advocate that discrimination in mortgage lending is a product of disparate effect, thus suggesting that the disparate impact theory may provide the most suitable scope required for investigating this complex phenomenon. Despite the reinforcement of disparate impact theory by several scholars, research has found it difficult to totally disentangle these theories and there is no consensus yet as to which of these theories and adequately describe the factors that drive mortgage lending discrimination.This research, therefore, reviews theoretical and empirical literature in mortgage lending with the aim of developing models that can effectively describe and analyse factors that drive mortgage market discrimination. This analysis will entail the investigation of relationships between variables used in the mortgage application with the aim observing causal factors of mortgage discrimination from the application stage to the mortgage decision, underwriting and loan administration stages which scholars have identified as major stages of the mortgage process in which discrimination plays out.
||Mortgage markets; Mortgage Discrimination; Disparate impact theory; Statistical discrimination; Differntial treatment discrimination
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||Doctoral session D
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