Abstract
We use artificial intelligence to identify financial steering activity in residential mortgage markets. Using mortgage data on bank sold properties and linking those to a unique data set that allows us to observe private information exchanges between listing and buyer agents, our results provide some interesting insights linked to steered mortgages. We find that over 50 percent of mortgages on bank sold properties involved steering activity. The underlying properties when listed for sale had selling constraints requiring financed buyers to be cross-qualified by an affiliated lender even if they had already been pre-qualified with another lender. Furthermore, while steering appears to give lenders selling foreclosed properties an advantage in capturing the mortgage business of new borrowers, we find evidence that steering might actually benefit borrowers.
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