Secondary Mortgage Market Research Articles

Sticky Mortgage Rates: Some Empirical Evidence

Mortgage rates have long been considered to be “sticky” rates compared to those on other capital market instruments. Using cross-spectral analysis and a more current mortgage market time series than previously available, the author documents 1) a well-functioning bond market with few lags and tight internal couplings, 2) a secondary mortgage market that appears to be fully integrated within the medium term capital markets, and 3) a primary mortgage market that evidences declining, yet persistently positive, lags behind bond market changes. Several institutional constraints are hypothesized to account for this seemingly inconsistent behavior.

De Facto Redlining a Geographic View

Redlining is the practice of withholding mortgage credit from an entire neighborhood with the ultimate result that the neighborhood succumbs to deterioration. Social response to prevent disinvestment in urban neighborhoods has been through legal and legislative efforts. The efficacy of these actions remains in doubt. A theory of redlining is presented which focuses on factors that loan committees of financial institutions use when considering loan applications. These factors operate at different geographical scales and include creditworthiness of the applicant, value of the property for sale, quality and stability of neighborhood, and secondary mortgage market potential of the loan in the national market. De facto redlining is the consequence of a chain of decisions involving the housing market and mortgage institutions which may or may not be apparent to those involved. If creditworthiness and soundness of property are spatially correlated with race, housing age, or other inappropriate variables, a dynamic is created that geographically concentrates approved loans in certain neighborhoods to the detriment of others. The spatial variation of conventional mortgage loans in Ann Arbor and Flint, Michigan are evaluated for evidence of de facto redlining through the use of a path analysis of census tract data.

INTERREGIONAL MORTGAGE RATE DIFFERENTIALS: THE EFFECTS OF MORTGAGE CONTRACTS, MORTGAGE LAW AND THE SECONDARY MORTGAGE MARKET

Financial ReviewVolume 17, Issue 2 p. 88-88 INTERREGIONAL MORTGAGE RATE DIFFERENTIALS: THE EFFECTS OF MORTGAGE CONTRACTS, MORTGAGE LAW AND THE SECONDARY MORTGAGE MARKET Mark Meador, Mark Meador Federal Home Loan Bank BoardSearch for more papers by this author Mark Meador, Mark Meador Federal Home Loan Bank BoardSearch for more papers by this author First published: July 1982 https://doi.org/10.1111/j.1540-6288.1982.tb00115.xCitations: 1AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat No abstract is available for this article.Citing Literature Volume17, Issue2July 1982Pages 88-88 RelatedInformation

Mortgage Markets and Inter‐Regional Differences in Conventional Mortgage Terms

One of the purposes of the secondary mortgage market is to move funds from areas of capital surplus to areas of capital shortage. If mortgage funds move freely throughout the economy then the price of mortgage funds (the terms of the mortgage) should be the same everywhere. Thus, if the secondary mortgage market is efficient, mortgage terms should show less geographic variation after the secondary market began in 1970 than they showed before. In this paper, the efficiency of the market is tested in two stages. In the first, the average terms of mortgage loans in 1968 and 1978 are examined to determine whether they became more homogeneous after the secondary market was begun. In the second stage, the terms are modeled as a function of region, year by region interaction variables, foreclosure rates, the usury ceiling and the average cost of funds. This model is estimated and analyzed using a multivariate multiple regression technique.

Modern Real Estate.

Partial table of contents: THE ANALYTICAL FRAMEWORK. The American Real Estate Industry: An Overview. Regional and Urban Economics. Spatial Economics: Rent, Situs, and Succession Theory. THE LEGAL ENVIRONMENT. Real Estate Interests and Forms of Ownership. Transferring Real Estate Interests. VALUATION AND THE APPRAISAL PROCESS. The Sales Comparison Approach and the Cost Approach. MARKETING, BROKERAGE, AND MANAGEMENT. Marketing. Brokerage. Asset Management: The Property Management Perspective. REAL ESTATE FINANCE. The Financial System and Real Estate Finance. Financing Mechanics: The Borrower's Perspective. Mortgage Underwriting: The Lender's Perspective. The Secondary Mortgage Markets. REAL ESTATE TAXATION. Income and Property Taxation. INVESTMENT ANALYSIS. Principles of Investment. The Discounted Cash-Flow Model. REAL ESTATE DEVELOPMENT. Land Use Feasibility Analysis. PUBLIC POLICY AND PROSPECTS FOR THE FUTURE. Government Involvement. Appendix. Compound Interest Tables. Glossary. Index.

A Taxonomic Model for the Risk-Rating of Residential Mortgages

A competitive economic system relies on its financial institutions and markets to allocate credit within an economy. For an efficient allocation of credit flows, the participants in financial markets need to have adequate information concerning the risk and return of competing investment opportunities. In the secondary mortgage market, two governmental instrumentalities-the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC)-provide assessments of the yields on alternative mortgage investments.' However, the information on the default risk of conventional mortgages offered in the secondary market has been rather limited. At the present time, a prospective investor must subjectively analyze the likelihood of default of each individual mortgage available in the market. Similar to the rating system in the bond market, it would be advantageous for the mortgage market to have a procedure for providing information on the relative default risk of a residential mortgage. An An innovation that would enhance the efficiency of the secondary mortgage market is the introduction of a methodology for the risk-rating of residential mortgages. This study develops a quantitative procedure for assessing the relative levels of default risk inherent in residential mortgages at origination. Through the application of a series of multivariate techniques, a taxonomic model is derived for the assignment of a conventional mortgage to one of six risk classes. The model is then utilized in the formation of a riskrating system for the secondary mortgage market.

Abstract: Transactions Costs and Hedging Strategies in Secondary Mortgage Markets

Abstract: Transactions Costs and Hedging Strategies in Secondary Mortgage Markets

THE IMPACT OF “FREE DISTRIBUTION” CONVERSION WINDFALLS ON THE SAVINGS AND LOAN INDUSTRY (Abstract)

The Journal of FinanceVolume 30, Issue 2 p. 681-687 New Developments in the Secondary Mortgage Market THE IMPACT OF “FREE DISTRIBUTION” CONVERSION WINDFALLS ON THE SAVINGS AND LOAN INDUSTRY (Abstract) A Study by the Staff* of the Office of Economic Research Federal Home Loan Bank Board First published: May 1975 https://doi.org/10.1111/j.1540-6261.1975.tb01841.x †Harris C. Friedman and Donald M. Kaplan co-directed the study. Principal investigators included: Henry J. Cassidy, Donald G. Edwards, Daniel M. Gordon, Marshall A. Kaplan, Josephine A. McElhone, and Richard C. Pickering. Study completed February 28, 1974 and presented at the American Finance Association Annual Meeting, December 29, 1974 in San Francisco, California. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Volume30, Issue2May 1975Pages 681-687 RelatedInformation

PRIVATE SECONDARY MARKET FACILITIES

THE PRIVATE SECONDARY MORTGAGE MARKET remains a will-o'-the-wisp; an elusive institution that the lending fraternity pursues diligently when credit tightens and forgets promptly when credit eases. The practice of market economics extols its virtues, but the economics of market practices inhibit its development. As rigidly defined, the secondary mortgage market is a resale market, where completed mortgages secured by single-family homes are bought and sold. As loosely defined by the trade, the secondary market includes the origination and sale of mortgages where the investor provides the originator with a prior commitment to purchase. The resale market would endow mortgages with all of the benefits commonly attributed to an effective secondary market:

The Secondary Mortgage Market: Its Purpose, Performance, and Potential

The Secondary Mortgage Market: Its Purpose, Performance, and Potential

The Secondary Mortgage Market: Its Purpose, Performance, and Potential.

The Secondary Mortgage Market: Its Purpose, Performance, and Potential.

The Development of an Effective Secondary Mortgage Market

The Development of an Effective Secondary Mortgage Market

THE FEDERAL NATIONAL MORTGAGE ASSOCIATION, 1938-57*

DETAILED AND DOCUMENTED accounts have been written on various government agencies which have figured importantly in housing and real estate finance. Despite the attention which the Federal National Mortgage Association (FNMA, Fanny May) has attracted and the impact of its operations upon housing, this financial institution has somehow escaped the scrutiny of scholars. To provide necessary background, this study reviews the rapid growth of non-farm mortgage debt and attempts to establish a secondary (resale) market for home mortgages patterned after those developed for securities and commodities. The nearest approach to this objective presently exists in FNMA. Relatively inactive in the first decade of its existence, FNMA has expanded greatly since 1947. This growth is attributable largely to the rapid increase in mortgage credit, which, in the postwar period, has outstripped that of all other debt categories-public and private. To place mortgages on a more competitive basis with other investment media for the scarce amount of available capital, it is imperative that their marketability be enhanced. This study was motivated in the light of the above developments. Concepts and criteria for evaluating the performance of a secondary mortgage market institution were formulated. After delineating the functions performed and policies pursued by FNMA, consisting of mortgage purchasing, selling, pricing, portfolio servicing, administration of capital, financial operations, accounting procedures and controls, and top management, a detailed description and analysis of each was made in one or more of the twenty-one chapters in this study. Despite market-support activity and pursuance of a rigid pricing policy, the pre-1954 FNMA generated large earnings resulting mainly from financing operations with capital borrowed from the United States Treasury at subsidized interest rates. This factor and failure to bear other operating expenses have given FNMA a misleading

THE FEDERAL NATIONAL MORTGAGE ASSOCIATION

THE EXTENSION of a large volume of credit on residential mortgages continues as an important element of economic stability. Its impact has been re-emphasized by the mortgage credit restrictions established in October, I950.1 Housing finance since the middle of I930's has been affected by the federal mortgage insurance and guaranty programs and by the establishing of a secondary mortgage market in the Federal National Mortgage Association (FNMA), formerly a part of the Reconstruction Finance Corporation and since September 7, I95o, a part of the Housing and Home Finance Agency.2 During the period I947 through I949 non-farm mortgage recordings of $20,000 or less have averaged nearly I2 billion annually and in the first seven months of I950 ran at a I 5-billion dollar rate. Of this huge total, which is incomplete because of the large quantity of rural non-farm building arising from urban population movements into unincorporated areas and of mortgages over $20,000, between one-fourth and one-third were FHA insured or VA guaranteed. This government insurance and guaranty program stimulated private lending by reducing risks and increasing