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Mr. Jaesik Kim
Ph.D. Candidate in Accounting (Minor: Finance)
Kelley School of Business
Indiana University

This study examines how disclosure of value-relevant information impacts home buyers’ access to mortgages. Utilizing variations in state-regulated house price disclosures, I examine how limited access to recent sales prices of nearby homes (comparables) impacts mortgage denial rates. In Non-Disclosure States (NDS), where comparables are not publicly available, buyers have varying information sets, leading to a wider range of negotiated prices and potentially higher mortgage denial rates. Consistent with this, I find that mortgage denials are more frequent in these states without mandated disclosures. Using Zillow’s entry with the Zestimate score, which provided NDS buyers with easily accessible value-relevant information, as a shock, I find that mortgage denial rates for NDS buyers decreased after Zillow’s entry. Also, I find that denial rates are higher in areas where buyers’ information sets likely vary more (i.e., areas with more non-local movers and smaller areas). Overall, the paper highlights the adverse effects of not mandating disclosure of value-relevant information.