Essays on structural change in the mortgage market after the financial crisis

Abstract

This dissertation explores how the post-crisis enforcement of loan repurchase demands by government-sponsored enterprises (GSEs) contributed to structural changes in the U.S. mortgage market. Specifically, it examines how GSEs repurchase risk affected bank underwriting behavior and reshaped the competitive dynamics between banks and nonbank lenders. The study combines theoretical modeling with empirical evidence to provide a cohesive understanding of how ex-post enforcement mechanisms influenced credit supply and market structure after the financial crisis. ☐ Chapter 1 develops a theoretical framework in which lenders choose their screening intensity in response to repurchase risk. The model shows that banks exposed to repurchase demands tighten lending standards, while nonbank lenders, who were largely unaffected, expand their market share post-2009. ☐ Chapter 2 uses bank-level data to show that banks facing higher GSEs repurchase demands significantly increased mortgage denial rates after 2009, suggesting that repurchase enforcement introduced a powerful disincentive for loan approvals. ☐ Chapter 3 shifts focus to regional lending outcomes. Using county-level data, this chapter shows that areas more exposed to repurchase risk experienced a measurable rise in nonbank market share. The increase reflects both a contraction in bank lending and expansion in nonbank activity, pointing to a reallocation of credit supply.