Response to Critiques of "Mortgage Discrimination and FHA Loan Performance"

This response discusses the critiques of Ross, Galster, and Yinger, with emphasis on the major issues of omitted variables and the potential for statistical discrimination. In our opinion, these concerns do not invalidate the use of loan performance data to investigate discrimination. Loan performance studies may not provide the complete and final answers to all research issues in lending discrimination, but they should be an integral part of the overall research program designed to understand discrimina tion and its effects.