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Religion and Mortgage Misrepresentation

Author

Listed:
  • James Conklin

    (University of Georgia)

  • Moussa Diop

    (University of Southern California)

  • Mingming Qiu

    (Michigan State University)

Abstract

We investigate whether religion acts as a deterrent to the types of mortgage misrepresentation that played a significant role in the recent housing boom and bust. Using a large sample of mortgages originated from 2000 to 2007, we provide evidence that local religious adherence (religiosity) is associated with a lower likelihood of home appraisal overstatement and owner occupancy misreporting. The evidence on borrower income misrepresentation is mixed. Religiosity does not appear to reduce the incidence of income misrepresentation; however, it seems to restrain the degree to which income is misrepresented. Our results are generally consistent with the hypothesis that religion, as a set of social norms, fosters ethical behavior, and possibly risk aversion, in the mortgage market.

Suggested Citation

  • James Conklin & Moussa Diop & Mingming Qiu, 2022. "Religion and Mortgage Misrepresentation," Journal of Business Ethics, Springer, vol. 179(1), pages 273-295, August.
    • Handle: RePEc:kap:jbuset:v:179:y:2022:i:1:d:10.1007_s10551-021-04831-2
    DOI: 10.1007/s10551-021-04831-2
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    Cited by:

    1. Hu, Mingzhi & Lin, Zhenguo & Liu, Yingchun, 2024. "Financial literacy and mortgage stress," Journal of Banking & Finance, Elsevier, vol. 163(C).

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    More about this item

    Keywords

    Mortgage fraud; Ethical behavior; Religion; Risk aversion; Appraisal bias; Owner occupancy misreporting; Income documentation; Liars loans;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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