Public service in the private sector: Private loan originator participation in a public mortgage program

Abstract

In the United States, housing policies focused on assisting low-income families toward homeownership have resulted in the creation of publicly subsidized affordable mortgage programs. Private lenders and their employees (loan originators) are often the key point of contact to connect low-income borrowers to public programs. But why would loan originators offer borrowers public loan programs, particularly when such programs provide no additional (and sometimes reduced) direct financial compensation to the private lenders and potentially increased workloads? One possible rationale, and the one investigated here, is that loan originators may be diversely motivated toward the advancement of the public interest. Situating the analysis within the theoretical insights of public service motivation in the public sector and corporate social responsibility in the private sector, we propose and test a "Model of Public Service in the Private Sector." We draw from surveys of private lenders to test hypotheses about how private lenders' associations, perceptions, and values are related to voluntary participation in a government program. Our analysis highlights the importance of public associations, perceptions of government, and public values in explaining the behavior of private sector employees. Our findings contribute to the literature on public service and public values and our understanding of how private organizations access government programs to advance the public good. © The Author 2010. Published by Oxford University Press on behalf of the Journal of Public Administration Research and Theory, Inc. All rights reserved.