Doctor of Philosophy / School of Family Studies and Human Services / Sonya L. Britt / This study explored whether the use of debt, specifically mortgages and student loans, has a negative relationship with wealth accumulation over a consumer’s lifetime. The analysis looked at whether exploration questioned whether consumer debt is incongruent with good personal financial management and consumers should hold a philosophy of avoidance of debt in order to accumulate more wealth. Some financial planners believe in leveraging current assets in hopes of accelerating wealth accumulation. The latter approach is more congruent with a behavioral life-cycle hypothesis perspective (Shefrin & Thaler, 1988), which posits that consumers are the happiest when consumption remains relatively constant over a lifetime through use of debt and savings. To account for wealth accumulation across the lifespan, a measure of relative net worth was constructed by taking current net worth divided by current annual income divided by age. Relative net worth was used rather than net worth in order to allow comparisons between consumers of different ages and income. Data were collected from a sample of convenience, recruited from social media, friends and their acquaintances, and the clients of financial advisors who agreed to distribute the survey. Four ordinary least squares (OLS) regression analyses were conducted to determine the influence of current mortgage relative to the value of the home, mortgage obtained at the time of home purchase as a multiple of income, and student loans at graduation as a multiple of income on relative net worth accumulations. Results suggested that current mortgage debt that is 80% or less of home value, lack of a mortgage, and completing higher education without student debt are associated with higher relative net worth. Using a sample of convenience, the respondent pool was not nationally representative. In comparison to the United States population, the sample population is more highly educated, has a higher percentage of married and individuals in a committed relationship, contains more adults over the age of 50, and does not reflect the ethnic diversity of the United States. This study did not provide deep new insight into the factors contributing to wealth accumulation. It showed that mortgages and student loans alone do not have a large impact on wealth accumulation. This is evidenced by the low R² for all regressions (ranging from .00 to .07). Of the independent variables chosen for regression, the impact was not large and statistical significance for those factors was not present in all regressions. The results of this study do not provide direct support to the ability to use mortgages and student loans as part of wealth accumulation strategies. Future studies may be able to incorporate other elements with debt decisions as well as the impact of financial advice on the use and levels of debt as part of an integrated wealth accumulation strategy. The level of debt to positively impact socioeconomic status is also another area for future study.

Thesis. 1977. Ph.D.--Massachusetts Institute of Technology. Dept. of Urban Studies and Planning. / MICROFICHE COPY AVAILABLE IN ARCHIVES AND ROTCH. / Vita. / Bibliography : leaves 334-342. / Ph.D.

This thesis is devoted to UK Mortgage Performance Modelling. The research conducted uses an option pricing methodology to model theoretically the value of Mortgages, the Option to default and the probability to default and to compare the predictive accuracy of the latter with the predictive accuracy of data driven credit-scoring techniques. Theoretical models are constructed to represent the life cycles of loans collateralised by real property operating within a stochastic economic environment of house-price and interest rate. These realistic mortgage models provide a confirmation of recent research based upon a relaxation of the assumption of financially rational, 'ruthless' prepayment, bridge a potential oversight in existing research by an extension of existing modelling in the stochastic behaviour of the house price process and present a proposal for a straightforward approach utilising characteristic measures of borrower delinquency and insolvency that enables estimation of the default probabilities implicit in residential mortgages using a simple but enhanced optimising structural model. This model straightforwardly demonstrates that one can predict the probability of eventual default, beginning at the origination of the loan, the time when a lender would be most interested in making such a determination. Secondly the problem of mortgage loan default risk is empirically assessed in a number of different ways focusing upon analysis of the competing risks of early termination, the inclusion of macro-economic variables - time varying covariates and unobserved borrower heterogeneity. Key insight is provided by means of a multi-period model exploiting the potential of the survival analysis approach when both loan survival times and the various regressors are measured at discrete points in time. The discrete-time hazard model is used as an empirical framework for analysing the deterioration process leading to loan default and as a tool for prediction of the same event. Results show that the prediction accuracy of the duration model is better than that provided by a single period logistic model. The predictive power of the discrete time survival analysis is enhanced when it is extended to allow for unobserved individual heterogeneity (frailty).

Defaulted retail mortgage loans as a percentage of retail mortgage loans and advances averaged 9 percent over 2010 as reported in the SARB Bank Supervision Annual report. Banks are in the business of risk taking and as a result need to constantly evaluate and review credit risk management to attain sustained profitability. In credit risk modelling, default risk is associated with client-specific factors particularly the client’s credit rating. However, Brent, Kelly, Lindsey-Taliefero, and Price (2011), have shown that variation in mortgage delinquencies reflect changes in general macroeconomic conditions. This study aims to provide evidence of whether macroeconomic factors such as the house price index, CPI, credit growth, debt to income ratio, prime interest rates, and unemployment, are key drivers of residential mortgage delinquencies and default in South Africa. In this study, data from an undisclosed bank is used to estimate three models that are supposed to capture the influence of several macroeconomic variables on 30 day, 60 day, and 90 day delinquency rates over the 2006-2010 period. In order to eliminate the potential bias introduced by those observations, a fourth model was estimated using aggregated banking industry published by the SARB. However, due to data constraints, only the severe mortgage delinquency state, that is the 90 day delinquency rate was modelled using this aggregate data. The SARB sample covers the period between 2008 and 2010. The choice of the date 2008 coincides with the introduction of the Basel 2 regulatory framework. Prior to 2008, the big four South African banks were governed by the Basel 1 framework, and measured their credit risk using the so-called Standardised Approach which has different loan categories and different default definitions compared to the Basel 2 Advanced Internal Ratings Approach adopted in 2008. The findings suggest that the two samples (i.e. the data from the individual bank and the SARB data) imply different explanatory macroeconomic factors. Prime interest rates were found to be the only important variable in determining 30 day and 60 day delinquency rates for the individual bank. The house price index, CPI, credit growth, and prime interest rates were found to be the main determinants of the 90 day delinquency rates for the undisclosed bank, while the house price index, CPI, and credit growth, determine the 90 day delinquency rates for the big four banks.

Thesis (Ph. D.)--University of Washington, 2001. / Vita. Includes bibliographical references (leaves 203-211).

ABSTRACT Real estate purchase in today’s market is an extensive issue and a concern especially to homeowners and for those who intend to own houses for the first time. Consumers have experienced dissatisfaction one way or the other in the form of settling in unexpected properties, struggling to pay their mortgages and in the long-run becoming victims to repossession and foreclosures. This study aimed at integrating the buying behaviour of consumer with the need of the consumer in the mortgage market using social marketing and consumer behaviour concepts to make emphasis on the need for the consumer to understand these concepts in making the right purchases. A consumer shortfall in getting the right type of property and mortgage arrangements is as a result of the complex involvement in the purchasing process of durable product such as a property. This study reviewed the buying behaviour of the consumer using the comprehensive models of consumer decision making. The model involved three stages namely; information search, evaluation of alternatives and decision rules. Consumers obtain information through internal and external factors; this study reviewed the essence of gathering internal (experience, etc) and external information (mortgage advisors, estate agents, etc) as a very important base on which alternatives can be evaluated and the right mortgage decision made. The research question therefore states: How can the behaviour and understanding of the consumer be enhanced in the mortgage market with the aim of ultimately meeting the need of the consumer? A random sampling was carried out using a telephone interview to homeowners in UK. The UK yellow page (Telephone directory) was used to identify homeowners (first time buyer alongside with existing homeowners). These consumers were randomly selected and contacted on the telephone for quarter of an hour interview. The aim of the sampling was to determine whether consumer decisions over the couple of years concerning property purchase and mortgage arrangements has either met their expectation or otherwise. Semi-structured questions were used to help respondents in delivering specifically to pre-stated answers (yes/no) and elaborate on other answers where needed. The samples were analysed quantitatively in order to clarify the differences in views that respondents have made. Findings from the data sample confirmed that consumers (first-time buyers and existing homeowners) lack adequate and accurate information necessary for the ultimate and suitable choice of mortgage to purchase. Results from the findings brought to light the state of many consumers being dissatisfied with their choice of mortgage arrangements. Findings showed that many consumers struggled to gather extensively and process given information into the desired choice of mortgage. The influence of second parties such as mortgage brokers played major role in influencing the buying decisions of consumers. The outcome of the data gathered raises the concern of enhancing the consumer with knowledge, understanding and easier process of acquiring a suitable mortgage.

Thesis (doctoral)--Universität Heidelberg.

Thesis (Ph. D.)--University of California, Riverside, 2009. / Includes abstract. Title from first page of PDF file (viewed April 2, 2010). Includes bibliographical references.

The period of high inflation during the late 1970s and early 1980s forced lenders to reconsider their methods of financing commercial real estate projects. During this period, lenders began experimenting with various new forms of mortgage documentation designed to support innovative financing techniques. Many of the innovative techniques developed included a participation feature whereby the lender, in addition to earning a fixed rate of interest, also participated in either the income from a project or the increased value in its equity, or both. As a result of instituting these techniques, both lenders and developers expanded their view of what a commercial mortgage entails. It is unlikely that lenders will return to viewing their role as that of simple renters of money. Since the law of mortgages in Canada has not been sufficiently flexible to adequately accommodate these innovative techniques, there is a need for reform of the law of commercial mortgages. In this paper, the writer will review the current commercial lending practices and discuss the advantages and disadvantages of the most commonly used forms of participation financing. The conclusion will set out a proposal for the reform of the law of commercial mortgages. Central to its recommendations will be the concept that the commercial mortgage should be regarded as a contract for a debt and not as a conveyance of an interest in property. This concept will allow the commercial lender and borrower the contractual freedom to enter into the bargain that best reflects their financing intentions without being hampered by the historical incidents of a common law mortgage. / Law, Peter A. Allard School of / Graduate

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