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Industrial Real Estate Mortgage Default Experience of the New York State Job Development Authority Second Loan Program: A Preliminary Investigation
Author(s) -
Simons Robert A.
Publication year - 1994
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 - 10.1111/1540-6229.00652
Subject(s) - equity (law) , default , bankruptcy , loan , mortgage underwriting , shared appreciation mortgage , foreclosure , real estate , home equity , actuarial science , non performing loan , bridge loan , business , population , economics , finance , mortgage insurance , insurance policy , general insurance , demography , sociology , political science , law
This paper explores the loan loss experience of a public industrial lending authority, employing contemporaneous borrower net equity as a link to mortgage loan default. The relationship between default, net equity and bankruptcy is tested on a small longitudinal data set of loans using nonparametric statistics and a proportional hazard model. Results show that negative net equity and firm bankruptcy are strongly associated with default among the study population. Further, the borrowers studied did not exercise the put option promptly, suggesting potential benefits from monitoring net equity one year or more prior to default.