Pricing Mortgage Originations
The general structure of observed mortgage loan contracts and the structure of firms in the industry can be explained in terms of competitive markets and rational expectations. It is not necessary to invoke disequilibrium, credit-rationing theories. Collateralization, covenants, downpayments, and other noninterest rate provisions in loan contracts are efficient mechanisms to control the conflict of interest between the borrower and lender. Finally, there are constraints lenders place on the range of contractual provisions offered because of interdependencies in payoffs across contracts and the costs they face associated with insolvency. Copyright American Real Estate and Urban Economics Association.
Year of publication: |
1982
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Authors: | Smith, Clifford W. |
Published in: |
Real Estate Economics. - American Real Estate and Urban Economics Association - AREUEA. - Vol. 10.1982, 3, p. 313-330
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Publisher: |
American Real Estate and Urban Economics Association - AREUEA |
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