of optimal risk-sharing in mortgage contracts. But since only a small literature has studied this question, more research … mortgage termination makes higher risk exposure for borrowers optimal. …Much of the literature on the economics of mortgage markets has studied the FRM-ARM choice made by individual borrowers …

is affected by a mortgage pricing convention that underestimates co-borrowers' actual creditworthiness. Specifically, we … variation across time in mortgage rates to confirm that the difference in prepayment incidence exists only during a period of … declining mortgage rates. At an aggregate level, we find that geographic areas with higher concentration of co-borrowers are …

investigated. Hedges are found to be risk-reducing, but imperfect, with significant basis risks. Dynamic hedges outperform static …