Residential racial segregation has been perennially viewed as a major urban problem in the United States. Meanwhile, the single-family mortgage market has been an influential factor in determining segregation since at least the 1930s. Although many prior studies rightly have focused on the very real individual and social costs of subprime loans and related loan features, the greater leverage they afford also may have allowed some, especially minority, homebuyers to purchase properties they otherwise would not have been able to afford. Limited loan-to-value and payment-to-income ratio requirements have constrained borrowers from prime, conventional lenders, and relaxing these standards might allow some borrowers to purchase more expensive homes, possibly in higher quality neighborhoods. Additionally, if minority borrowers disproportionately obtained high-leverage loans, the effect of these loans on neighborhood choice may be greater for minorities than non-Hispanic whites. Since higher-quality neighborhoods are disproportionately non-Hispanic white or racially diverse, the increase in high-leverage mortgages might mitigate the neighborhood quality gap between minorities and non-Hispanic whites and reduce levels of racial/ethnic segregation. Accordingly, this dissertation focuses on two research questions: 1) whether high-leverage home purchase loans enabled borrowers to purchase more expensive homes and homes in higher-quality neighborhoods; and 2) whether these loans affected the racial/ethnic segregation of homebuyers at the metropolitan level. Since blacks and Hispanics comprise significant minorities in many metropolitan areas in the 2000s, I examine the questions for three racial/ethnic groups: non-Hispanics whites, blacks, and Hispanics. To answer the first question, household housing demand and neighborhood quality models are estimated using the American Housing Survey data. To answer the second question, metropolitan area segregation models are estimated primarily using the American Community Survey and the Home Mortgage Disclosure Act. Both cross-sectional and fixed-effect panel segregation models are estimated using a two-stage least squares approach with chosen instruments. I find that the use of high-leverage loans increases housing demand and neighborhood quality, holding other household characteristics constant. I also find that high-leverage loans have a substantial, negative effect on black segregation, while the effect on Hispanic segregation is somewhat ambiguous. The findings suggest that policymakers should consider the impact of regulations affecting allowable loan-to-value and payment-to-income ratios on borrowers' residential choice and urban form, as well as on default risk.

Why Do Borrowers Choose Arms Over FRMS? : A Behavioral Investigation in the U.S. and Japan by Masaki Mori In the U.S., a considerable number of borrowers still choose adjustable rate mortgages (ARMs) over fixed rate mortgages (FRMs), even with historically low interest rates. During 2004-2005, when interest rates remained at 30-year lows, ARMs accounted for approximately one-third of all mortgage originations. Kahneman and Tversky's Prospect Theory’s reflection hypothesis suggested that people tend to be more risk-averse in positive decision situations, while they tend to be more risk-seeking when making negative choices. The first purpose of this study is to examine descriptive reasons for the popularity of ARMs in the U.S. People of different cultures often evaluate uncertain events in different ways. Hofstede developed a cultural dimension, uncertainty avoidance (UA), where UA is defined as the extent to which people feel threatened by uncertain situations. The second purpose of this study is to test the role of UA on the choice of mortgage products using data from two cultures (U.S. and Japan), potentially differing in attitude toward uncertain situations. Controlled experiments were conducted using 92 U.S. participants and 49 Japanese participants. Results of analysis supported Prospect Theory’s reflection hypothesis, suggesting that risk-averse people tend to become more risk-seeking when choosing a mortgage type, leaning more toward ARMs when people frame the mortgage choice problem as part of a loss situation. The results of the intercultural comparison portion of the study supported the research hypothesis that UA works as a moderating variable for Prospect Theory’s reflection hypothesis, suggesting that risk-averse people with lower UA scores more dramatically change from a risk-averse preference for a fixed-rate bond to a more risk-seeking preference for an adjustable-rate mortgage, than risk-averse people with higher UA scores do. Overall, results of this study suggested that borrowers behave differently depending on their propensity for current consumption, the level of UA, and how they frame the mortgage choice decision. This study contributes to existing mortgage choice literature by incorporating psychological and cultural traits to examine borrowers’ attitudes towards interest rate risk with regard to residential mortgages. The findings are of great importance globally for governments and lenders in creating and introducing new mortgage products in countries with diverse cultures.

<p>Den första januari 2009 ändrades Förmånsrättslagen och bankerna har återigen fått särskild förmånsrätt med 100 procent vid utmätning och konkurs. Den lagändring som genomfördes 2004 innebar endast 55 procent och allmän förmånsrätt för bankerna och fick inte den effekt som regeringen önskat och det blev svårare för företag att låna pengar från banken. De alternativa finansieringsformerna ökade då bankerna inte längre hade samma säkerhet vid konkurser utan då fanns istället säkerheten i objektet. Genom de undersökningar som gjorts där resultat visat de negativa effekterna beslutades om att återställa bankernas förmånsrätt. Frågan är om återgången kommer att förändra bankernas kreditgivning. Genom de intervjuer som genomförts visar de konsekvenser som den tidigare lagen haft på kreditgivningen på att en återgång var nödvändig. I dagsläget ser det inte ut som den nya lagen kommer att påverka finansiärernas syn på krediter med företagshypotek utan de alternativa finansieringsformerna kommer att bestå.</p> / <p>January 1st 2009 the banks priority rights were restored to once again have special rights with 100 percent at distraint and bankruptcy. The change in Law of priority rights that carried through in 2004 meant only 55 percent and general priority rights. This did not have the desired effects. Instead it became more difficult for companies to get loans from the banks. The alternative financing forms were increasing as the banks no longer had the same security at bankruptcies. The security was instead the object. After research that showed the negative effects with the change in law 2004, the government decided to restore the priority rights of the banks. The question is whether the restoration will change the banks crediting process. The conducted interviews show that a regression was necessary. It does not look like the new law will affect the creditors view on crediting with chattel mortgage, the alternative financing forms will remain.</p>

Final thesis is concerned on explanation of mortgage market concept in the Czech Republic, in the United States of America and Japan. First part is focused on characterization of mortgage market in general. The second part sets reasons for selection of states and describes theirs brief demographic, geographic, historic and cultural characteristics. Second part is divided into a three smaller sections, which represents analyze of mortgage market in each country. Although the attention is paid on the mortgage market crisis which was born in The United States, we can not forget the interconnection of a world finance sector and be aware of a speed of expansion and potential risk for other world economies.

Under de senaste 20 åren har värdet på de svenska privata hushållens bostadslån ökat med i genomsnitt 8,1 % per år. Som en konsekvens av att bostadspriserna ökat i högre takt än inflationen har hushållen tvingats belåna sig i en högre grad, vilket bidragit till att både skuldkvoten och belåningsgraden ökat. Hushållen har på grund av detta blivit mer exponerade för risker i form av ränteförändringar eller i form av bostadsbubblor. Ett bostadslån är för majoriteten av den svenska befolkningen den största och mest riskfyllda investering som görs under dess livstid och kan ge bekymmersamma konsekvenser vid fel beslut. Vid ett bolån står låntagaren inför ett val mellan rörlig och bunden ränta, där den bundna räntan ses som det säkra valet. Bolånetagare kan också välja att dela upp ränta med en del rörlig och en del bunden ränta vilket då kan tolkas som ett säkrare val än rörlig ränta men mer osäkert än bunden ränta. Tidigare forskning konstaterar dock att många bolånetagare har svårt att förstå risken och följden av valen mellan olika räntebindningstider och på grund av komplexiteten med räntor inte fatta rationella beslut. Syftet med studien är att undersöka hur vissa utvalda faktorer påverkar valet mellan bunden och rörlig räntebindningstid och koppla detta till ekonomiska teorier. Studien använder sig av en multinomial logistisk regression och faktorerna som analyseras är: ålder, låneobjektet, belåningsgraden, skuldkvoten, inkomsten, antalet låntagare i hushållet, räntedifferensen (mellan rörlig och bunden 2 år) och förändringar under pandemin covid-19 under perioden 2016 - 2021.  Resultatet av studien är av intresse för både svenska beslutsfattare och banker, då resultatet visar vad som driver bolånetagare riskexponering. Vidare konstaterar studien att bolånetagarna har en minskad riskaversion med en ökad förmögenhet, samt att bolånetagare med högst skuldkvot och belåningsgrad är de hushåll som väljer rörlig ränta i högst utsträckning. Där med konstaterar studien att de svenska bolånetagare som är mest exponerade för risk också är de bolånetagare som i lägst utsträckning binder sin ränta och är där med mest risksökande i deras val av ränta. / Over the past 20 years, the value of Swedish private households' housing loans has increased by an average of 8.1% per year. Because of house prices rising at a higher rate than inflation, households have been forced to borrow to a greater extent, which has contributed to an increase in both the debt-to-income ratio and the loan-to-value ratio. As a result, households have become more exposed to risks, as interest rate changes or housing bubbles. For most of the Swedish population, a housing loan is the largest and most risky investment made during its lifetime and can have worrying consequences in the event of a wrong decision. In the case of a mortgage, the borrower is faced with a choice between variable and fixed interest rates, where the fixed loan is seen as the safe choice. Mortgage borrowers can also choose to divide interest with some variable and some fixed interest, which can then be interpreted as a safer choice than variable interest but more uncertain than fixed interest. Previous research finds, however, that many mortgage borrowers find it difficult to understand the risk and consequences of the choices between different fixed interest periods and, due to the complexity of interest rates, do not make rational decisions.  The purpose of the study is to investigate what influences the choice between fixed and variable interest rate periods and link this to economic theories. The study uses a multinomial logistical regression, and the factors analyzed are age, loan object, loan-to-value ratio, debt ratio, income, number of borrowers in the household, the interest rate differential (between variable and fixed rate 2 years), and changes during the covid-19 pandemic during the period 2016 - 2021.  The results of the study are of interest to both Swedish decision-makers and mortgage banks, as the results show what drives mortgage borrowers' risk exposure. Furthermore, the study states that mortgage borrowers have decreased risk aversion with increased wealth and that mortgage borrowers with the highest debt ratio and loan-to-value ratio are the households that choose variable interest rates to the greatest extent. Thus, the study states that the Swedish mortgage borrowers who are most exposed to risk are also the mortgage borrowers who to the least extent tie their interest rate, consequently, mortgage borrowers with the highest loan-to-value ratio are also the most risk-seeking group in their choice of interest rate.

Secondary Mortgage Markets and Place-Based Inequality: Space, GSEs and Social Exclusion in the Philadelphia Region Michael H. Norton Temple University, 2015 Doctoral Advisory Committee Chair: Dr. Anne Shlay In 2015 virtually the entire US mortgage market is subsidized by US taxpayers. When the Federal Government took control of the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac in the summer of 2008, US tax payers assumed responsibility for the vast majority of outstanding mortgage debt in the country. This dissertation examined the historical development and contemporary activity of the secondary mortgage market to understand the way the secondary market contributes to the reproduction of place-based inequality in American cities. Specifically, this dissertation analyzed the political-economic history of the secondary mortgage market to ground a contemporary analysis of the impact of secondary mortgage market activity on neighborhood change in the Philadelphia region at the turn of the 21st century. At the turn of the 21st century secondary market institutions coordinated a financial production process referred to in this study as the financialization of space. This process transforms the individual spatial relationships between individuals and their homes into financial commodities that are bought and sold by financial institutions. Individual mortgage loans make the financialization of space possible by providing the raw material that transmits capital embedded in the social spaces of individual homes and communities through secondary market institutions and into the abstract spaces of international capital markets. However, the financialization of space itself is made possible by a number of key contradictions that created considerable tension between the ongoing expansion of finacialized space and mortgage lending to individual home owners. These tensions were built into the very framework of the legislative policies governing the secondary mortgage market. The evolution of the secondary mortgage market was informed by parallel streams of housing policy that alternately sought to expand and regulate the primary and secondary mortgage markets at the end of the 20th century. The confluence of these policy streams initially created the conditions for the GSEs to pioneer financial productions processes that led to the financializaiton of space. At the same time, the emergence of subprime lending in the primary market, combined with the expansion of the secondary mortgage market to unregulated, private institutions, created dual housing markets differentiated by the types of loans available in the primary market and the funding sources for these loans in the secondary market. Throughout the study period (1996 – 2007), the GSEs concentrated the vast majority of all their purchasing activity buying conventional loans in the more affluent areas of the region. On the other hand, private institutions steadily eroded GSE market share in the conventional market, represented virtually the entire secondary market for subprime loans, and were considerably more active purchasing loans made to borrowers in communities that had been historically excluded from the primary mortgage market. Secondary market activity from 1996 to 2007 was significantly associated with changes along key housing and socio-economic conditions from 1990 to 2010. GSE market share was significantly associated with changing homeownership levels in neighborhoods throughout the region from 1990 to 2010. Higher levels of GSE market share were associated with net increases in homeownership in neighborhoods throughout the region. In a similar way, GSE-informed changes in homeownership levels were subsequently associated with significant changes in the percentage of residents living in poverty in neighborhoods throughout the region from 1990 to 2010, particularly on the Pennsylvania side of the region. Unlike the relationship between secondary market purchasing and homeownership, the relationship between secondary market purchasing and poverty levels functions through housing - either by virtue of more affluent residents moving in, or poor residents moving out of these areas. In both instances, GSE market share, and GSE-informed changes in homeownership sharpened differences between the different communities depending on where the GSEs concentrated their purchasing activity. The region’s urban centers, where GSE market share was lowest, experienced the greatest reductions in home ownership throughout the region, and the greatest increases in neighborhood poverty levels. In addition, the spatial relationships between individual neighborhoods exerted significant influences on changes in each of the housing and socio-economic indicators assessed. These findings suggest that space itself, and the spatial relationships between neighborhoods, exerted a significant influence on both secondary market activity and changing neighborhood conditions throughout the Philadelphia region. Over the twenty year period observed in this study, the types of differences between neighborhoods in the region have remained largely the same, while the degree of these differences has intensified during this time. In this way, the spatial distribution of neighborhood types in the Philadelphia region informed secondary market at the turn of the 21st century, which in turn contributed to the intensification of the differences between neighborhood types throughout the region. The findings presented in this study point to a number of key implications for theorists seeking to explain the role of space and place in the (re)production of patterns of uneven-development in metropolitan regions, and for understanding the financializaiton of space. In addition, these findings also point to key insights for policy makers currently developing legislation to reform the secondary mortgage market. / Sociology

This study extends a previously developed model of real estate capitalization rates. The preceding model suggests that real estate cap rates are a function of debt and equity spreads over the real risk free rate. In an effort to further the previous research, the effects that commercial real estate mortgage markets have on cap rates is considered. Mortgage originations and debt service coverage ratios are used to proxy the effects of the commercial mortgage market. The empirical results reconfirm the significance of debt and equity spreads. Furthermore, mortgage markets are shown to have a significant effect on capitalization rates. These results help to explain contributing factors to the real estate bubble of 2007.

Структура магистерской диссертации включает в себя введение, три главы, заключение, список использованных источников и приложения. В первой главе исследованы теоретические основы экономическую сущность, функции и принципы кредитования. Исследованы работы ряда отечественных экономистов, рассматривающих понятие, сущность ипотечного кредитования, высказана авторская позиция по рассматриваемым вопросам. Во второй главе оценивается российский рынок ипотечного банковского кредитования, проведен анализ кредитного процесса ПАО «Сбербанк» в области жилищного ипотечного кредитования оценены финансовые показатели его деятельности. В третьей главе были определены проблемы кредитного процесса ПАО «Сбербанк» в области жилищного ипотечного кредитования и предложены мероприятия, направленные на расширение возможностей получения ипотечных кредитов в банке с целью увеличения спроса на них. В заключении сформированы основные выводы. / The structure of the master's thesis includes an introduction, three chapters, conclusion, list of sources used and appendices. The first chapter examines the theoretical foundations of the economic essence, functions and principles of lending. The work of a number of domestic economists considering the concept and essence of mortgage lending is studied, the author's position on the issues under consideration is expressed. The second chapter evaluates the Russian mortgage banking lending market, analyzes the credit process of Sberbank PJSC in the field of housing mortgage lending, and evaluates the financial performance of its activities. In the third chapter, the problems of the credit process of Sberbank PJSC in the field of housing mortgage lending were identified and measures were proposed aimed at expanding the possibilities of obtaining mortgage loans from the bank in order to increase demand for them. In conclusion, the main conclusions are formed.

Many analysts believe that problems in the U.S. housing market initiated the 2008–2010 global financial crisis. In this regard, the subprime mortgage crisis (SMC) shook the foundations of the financial industry by causing the failure of many iconic Wall Street investment banks and prominent depository institutions. This crisis stymied credit extension to households and businesses thus creating credit crunches and, ultimately, a global recession. This thesis specifically discusses the SMC and its components, causes, consequences and cures in relation to subprime mortgages, securitization, as well as data. In particular, the SMC has highlighted the fact that risk, credit ratings, profit and valuation as well as capital regulation are important banking considerations. With regard to risk, the thesis discusses credit (including counterparty), market (including interest rate, basis, prepayment, liquidity and price), tranching (including maturity mismatch and synthetic), operational (including house appraisal, valuation and compensation) and systemic (including maturity transformation) risks. The thesis introduces the IDIOM hypothesis that postulates that the SMC was largely caused by the intricacy and design of subprime agents, mortgage origination and securitization that led to information problems (loss, asymmetry and contagion), valuation opaqueness and ineffective risk mitigation. It also contains appropriate examples, discussions, timelines as well as appendices about the main results on the aforementioned topics. Numerous references point to the material not covered in the thesis, and indicate some avenues for further research. In the thesis, the primary subprime agents that we consider are house appraisers (HAs), mortgage brokers (MBs), mortgagors (MRs), servicers (SRs), SOR mortgage insurers (SOMIs), trustees, underwriters, credit rating agencies (CRAs), credit enhancement providers (CEPs) and monoline insurers (MLIs). Furthermore, the banks that we study are subprime interbank lenders (SILs), subprime originators (SORs), subprime dealer banks (SDBs) and their special purpose vehicles (SPVs) such as Wall Street investment banks and their special structures as well as subprime investing banks (SIBs). The main components of the SMC are MRs, the housing market, SDBs/hedge funds/money market funds/SIBs, the economy as well as the government (G) and central banks. Here, G either plays a regulatory or policymaking role. Most of the aforementioned agents and banks are assumed to be risk neutral with SOR being the exception since it can be risk (and regret) averse on occasion. The main aspects of the SMC - subprime mortgages, securitization, as well as data - that we cover in this thesis and the chapters in which they are found are outlined below. In Chapter 2, we discuss the dynamics of subprime SORs' risk and profit as well as their valuation under mortgage origination. In particular, we model subprime mortgages that are able to fully amortize, voluntarily prepay or default and construct a discrete–time model for SOR risk and profit incorporating costs of funds and mortgage insurance as well as mortgage losses. In addition, we show how high loan–to–value ratios due to declining housing prices curtailed the refinancing of subprime mortgages, while low ratios imply favorable house equity for subprime MRs. Chapter 3 investigates the securitization of subprime mortgages into structured mortgage products such as subprime residential mortgage–backed securities (RMBSs) and collateralized debt obligations (CDOs). In this regard, our discussions focus on information, risk and valuation as well as the role of capital under RMBSs and RMBS CDOs. Our research supports the view that incentives to monitor mortgages has been all but removed when changing from a traditional mortgage model to a subprime mortgage model. In the latter context, we provide formulas for IB's profit and valuation under RMBSs and RMBS CDOs. This is illustrated via several examples. Chapter 3 also explores the relationship between mortgage securitization and capital under Basel regulation and the SMC. This involves studying bank credit and capital under the Basel II paradigm where risk–weights vary. Further issues dealt with are the quantity and pricing of RMBSs, RMBS CDOs as well as capital under Basel regulation. Furthermore, we investigate subprime RMBSs and their rates with slack and holding constraints. Also, we examine the effect of SMC–induced credit rating shocks in future periods on subprime RMBSs and RMBS payout rates. A key problem is whether Basel capital regulation exacerbated the SMC. Very importantly, the thesis answers this question in the affirmative. Chapter 4 explores issues related to subprime data. In particular, we present mortgage and securitization level data and forge connections with the results presented in Chapters 2 and 3. The work presented in this thesis is based on 2 peer–reviewed chapters in books (see [99] and [104]), 2 peer–reviewed international journal articles (see [48] and [101]), and 2 peer–reviewed conference proceeding papers (see [102] and [103]). / Thesis (Ph.D. (Applied Mathematics))--North-West University, Potchefstroom Campus, 2011.

Many analysts believe that problems in the U.S. housing market initiated the 2008–2010 global financial crisis. In this regard, the subprime mortgage crisis (SMC) shook the foundations of the financial industry by causing the failure of many iconic Wall Street investment banks and prominent depository institutions. This crisis stymied credit extension to households and businesses thus creating credit crunches and, ultimately, a global recession. This thesis specifically discusses the SMC and its components, causes, consequences and cures in relation to subprime mortgages, securitization, as well as data. In particular, the SMC has highlighted the fact that risk, credit ratings, profit and valuation as well as capital regulation are important banking considerations. With regard to risk, the thesis discusses credit (including counterparty), market (including interest rate, basis, prepayment, liquidity and price), tranching (including maturity mismatch and synthetic), operational (including house appraisal, valuation and compensation) and systemic (including maturity transformation) risks. The thesis introduces the IDIOM hypothesis that postulates that the SMC was largely caused by the intricacy and design of subprime agents, mortgage origination and securitization that led to information problems (loss, asymmetry and contagion), valuation opaqueness and ineffective risk mitigation. It also contains appropriate examples, discussions, timelines as well as appendices about the main results on the aforementioned topics. Numerous references point to the material not covered in the thesis, and indicate some avenues for further research. In the thesis, the primary subprime agents that we consider are house appraisers (HAs), mortgage brokers (MBs), mortgagors (MRs), servicers (SRs), SOR mortgage insurers (SOMIs), trustees, underwriters, credit rating agencies (CRAs), credit enhancement providers (CEPs) and monoline insurers (MLIs). Furthermore, the banks that we study are subprime interbank lenders (SILs), subprime originators (SORs), subprime dealer banks (SDBs) and their special purpose vehicles (SPVs) such as Wall Street investment banks and their special structures as well as subprime investing banks (SIBs). The main components of the SMC are MRs, the housing market, SDBs/hedge funds/money market funds/SIBs, the economy as well as the government (G) and central banks. Here, G either plays a regulatory or policymaking role. Most of the aforementioned agents and banks are assumed to be risk neutral with SOR being the exception since it can be risk (and regret) averse on occasion. The main aspects of the SMC - subprime mortgages, securitization, as well as data - that we cover in this thesis and the chapters in which they are found are outlined below. In Chapter 2, we discuss the dynamics of subprime SORs' risk and profit as well as their valuation under mortgage origination. In particular, we model subprime mortgages that are able to fully amortize, voluntarily prepay or default and construct a discrete–time model for SOR risk and profit incorporating costs of funds and mortgage insurance as well as mortgage losses. In addition, we show how high loan–to–value ratios due to declining housing prices curtailed the refinancing of subprime mortgages, while low ratios imply favorable house equity for subprime MRs. Chapter 3 investigates the securitization of subprime mortgages into structured mortgage products such as subprime residential mortgage–backed securities (RMBSs) and collateralized debt obligations (CDOs). In this regard, our discussions focus on information, risk and valuation as well as the role of capital under RMBSs and RMBS CDOs. Our research supports the view that incentives to monitor mortgages has been all but removed when changing from a traditional mortgage model to a subprime mortgage model. In the latter context, we provide formulas for IB's profit and valuation under RMBSs and RMBS CDOs. This is illustrated via several examples. Chapter 3 also explores the relationship between mortgage securitization and capital under Basel regulation and the SMC. This involves studying bank credit and capital under the Basel II paradigm where risk–weights vary. Further issues dealt with are the quantity and pricing of RMBSs, RMBS CDOs as well as capital under Basel regulation. Furthermore, we investigate subprime RMBSs and their rates with slack and holding constraints. Also, we examine the effect of SMC–induced credit rating shocks in future periods on subprime RMBSs and RMBS payout rates. A key problem is whether Basel capital regulation exacerbated the SMC. Very importantly, the thesis answers this question in the affirmative. Chapter 4 explores issues related to subprime data. In particular, we present mortgage and securitization level data and forge connections with the results presented in Chapters 2 and 3. The work presented in this thesis is based on 2 peer–reviewed chapters in books (see [99] and [104]), 2 peer–reviewed international journal articles (see [48] and [101]), and 2 peer–reviewed conference proceeding papers (see [102] and [103]). / Thesis (Ph.D. (Applied Mathematics))--North-West University, Potchefstroom Campus, 2011.