Do Local Bank Branches Shape Mortgage Origination?

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Can local lenders influence mortgage origination decisions? We examine the role of branch managers and find that branch managers’ idiosyncratic past experiences with loan approvals significantly shape their current approval decisions, reflecting localized decision-making and an “imprinting” of lending practices from previous positions. These effects are moderated by branches’ securitization capacity, credit market competition, and bank size. We exploit DOJ litigation against FHA insurance fraud as exogenous shocks to approval leniency at managers’ previous branches. Those witnessing litigations sharply raise denial rates when managing subsequent branches. Importantly, manager-specific experiences influence their responses monetary policy, generating heterogeneous transmission across locations.