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NMDB Staff Working Papers

NMDB Staff Working Paper 18-01: Mortgage Experiences of Rural Borrowers in the United States: Insights from the National Survey of Mortgage Originations

Published: 3/14/2018
Author:

​Tim Critchfield1, Jaya Dey2, Nuno Mota3, and Saty Patrabansh4

1Consumer Financial Protection Bureau, 2Freddie Mac, 3Fannie Mae, and 4Federal Housing Finance Agency

To date, research on rural mortgage markets in the United States has been limited by a lack of data on the specific mortgage experiences of borrowers living in rural areas.  To fill this data gap, the National Survey of Mortgage Originations (NSMO) conducted a survey that oversampled people who took out mortgages in completely rural counties in 2014.  This paper reports results from this survey, contrasting the characteristics, experiences, and loan terms of mortgage borrowers in completely rural counties to those of borrowers in metropolitan and other non-metropolitan areas.  Completely rural counties are those with no urban cluster or an urban population less than 2,500.  We find that borrowers in completely rural counties paid slightly higher interest rates on average and were less satisfied that their mortgage was the one with the best terms to fit their needs than borrowers in other areas.  These results persist even after controlling for income, credit quality, and other borrower characteristics.  Completely rural borrowers were less likely than other borrowers to be satisfied with the mortgage closing process, the timeliness of disclosures, and the disclosure documents themselves.  Finally, compared with borrowers in more urban areas, borrowers in completely rural areas tend to be less confident or knowledgeable about some details of mortgages, and they are more likely to initiate contact with their lender.

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