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A Research Note on Factors Associated with Troubled Residential Construction Loans
Author(s) -
Lusht Kenneth M.,
Leidenberger Bruce E.
Publication year - 1979
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.t01-7-00201
Subject(s) - unavailability , sample (material) , actuarial science , economics , interest rate , business , monetary economics , engineering , chemistry , chromatography , reliability engineering
Several factors considered significant in determining the level of construction lending risk were tested for association with samples of troubled and good residential construction loans. Generally, a priori expectations were confirmed. The strongest associations with risk were found for unavailability of materials, followed by inflationary cost overruns and borrower experience. Interest rates on the sample of troubled loans did not significantly differ from the rates on the sample of good loans, suggesting the lender did not adequately recognize elements of lending risk, or that those risks were ignored.