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There are numerous factors that can improperly influence the approval of a sketchy mortgage application. But can an abundance of sunshine result in the clouding up of a loan officer’s better judgment?
According to a KPLU report, new data from the University of Washington has determined that the weather plays a role in determining whether a marginal mortgage application is accepted or rejected. The research paired the weather with the level of loan officer decisions and concluded that more approvals occurred on unexpectedly sunny days while more rejections piled up on unexpectedly cloudy days.
"We sort of know from psychology that when it’s cloudy, people tend to be less happy than when it’s sunny," said Ran Duchin, associate professor of finance at the UW Foster School of Business. "You can get that data at an hourly level across all weather stations in the U.S. You just get it online."
Alas, the surplus amount of sunny day approvals turned out to be more likely to go into default.
"The cool thing about this data is that for all the applications that are approved, we could actually trace the performance of those loans being originated, after they’re approved," Duchin said, adding that it was incumbent on lenders to investigate “to what extent should we automate some of the decision-making processes ... to avoid this sort of human factor, these mistakes."