Threre have been recent studies of lending practices, including one by the [tag]Center for Responsible Lending[/tag] (CRL). While most of the studies leave out important differences between the groups, including [tag]credit score[/tag]s, the CRL study takes into account credit and other relevant factors, and its findings are the same. They find that [tag]minorities[/tag] generally pay more, which rings true to me. To understand how and why it happens, it is necessary to understand how mortgages prices are determined. In more than 90 percent of the transactions, it is a two-stage process. Stage 1 is the development of posted prices that are delivered to [tag]loan officer[/tag]s and [tag]mortgage brokers[/tag]. Stage 2 is the determination of final prices paid by the [tag]borrower[/tag].

Posted prices are either retail or wholesale. Wholesale prices are posted by wholesale lenders to mortgage brokers and [tag]correspondent lenders[/tag] (CLs). (Unlike brokers, CLs fund loans, but they deliver them to the same wholesale lenders as brokers. Henceforth, I use the term “brokers” to include CLs). Retail prices are posted by retail lenders to their loan officer employees. [tag]Mortgage prices[/tag] are delivered by fax or (increasingly) over the Internet in the form of “price sheets.” These sheets are voluminous because each loan program must be priced separately and because pricing has become so complex. Prices vary with the borrower’s credit, purpose of loan, type of property, type of documentation, state location of property, and other factors.

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