NBER Working Papers · 2026 · Neil Bhutta、Benjamin J. Keys、Adithya Raajkumar
Abstract
Market power may arise not only from firms, but also from individual salespeople who can exploit informational advantages over consumers. We explore this phenomenon in the mortgage market by examining a Fannie Mae/Freddie Mac fee waiver targeted at lower-income first-time homebuyers. We estimate that mortgage intermediaries capture over 60% of $1.5 billion in total fee waivers during 2023–2024, rather than fully passing these savings through to borrowers. Pass-through varies substantially across loan officers: those with a track record of originating expensive mortgages (independent of lender pricing) pass through less than 20% of the waiver. Our evidence suggests that loan officers retain incentives to steer borrowers into higher-rate mortgages, despite post-crisis regulations designed to limit such practices.