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Residential Mortgage Markets and the Cost of Mortgage Funds
Author(s) -
Hendershott Patric H.,
Villani Kevin E.
Publication year - 1980
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00205
Subject(s) - shared appreciation mortgage , secondary mortgage market , mortgage insurance , collateralized mortgage obligation , mortgage underwriting , cost of funds index , intermediation , commercial mortgage backed security , economics , monetary economics , financial system , loan to value ratio , business , interest rate , finance , casualty insurance , insurance policy
Early federal housing finance policy appears to have been largely directed at making mortgages more marketable. The creation of FHA, FNMA and FHLMC were designed to homogenize the mortgage instrument and to develop a secondary market for it. Apparently because of a lack of demand for marketability by investors, extensive trading of mortgages has not developed. Nonetheless, the fantastic growth in mortgage pools (as well as the unanticipated growth in FNMA holdings) has increased competition in the supplying of some intermediation functions (mortgage bankers have greatly expanded originations and servicing), has improved interregional flows of mortgage funds, and has given mortgage borrowers a greater access to capital markets generally. The principal result has been a decline in the mortgage rate relative to other market rates, although the inflation‐triggered explosion in the demand for mortgage funds in recent years appears to be offsetting the impact of the growth in federal credit broadly defined.