1 / 10

The Development of Mortgage Markets

The Development of Mortgage Markets. 1950’s – A Decade of Stability Maturity Mismatch??? Inflation: Regulation Q: 1960’s – Creeping Inflation, Disintermediation, and the rise of the Secondary Mortgage Market. The Development of Mortgage Markets. The Development of Mortgage Markets.

shaw
Télécharger la présentation

The Development of Mortgage Markets

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. The Development of Mortgage Markets • 1950’s – A Decade of Stability • Maturity Mismatch??? • Inflation: • Regulation Q: • 1960’s – Creeping Inflation, Disintermediation, and the rise of the Secondary Mortgage Market

  2. The Development of Mortgage Markets

  3. The Development of Mortgage Markets • 1970’s – FRM Problems with Inflation • The “Tilt” Effect • Supply Problems • Continued Growth of the Secondary Market

  4. The “Tilt” Effect

  5. The Development of Mortgage Markets • 1980’s – Deregulation, the Growth of AMI’s, and the Thrift Crisis

  6. The Thrift Crisis • Regulatory Failure: • FSLIC Forbearance • Additions to Net Worth • RAP vs. GAAP Accounting • The “Zombie” Theory

  7. FIRREA to the Rescue??? • Changes Mandated FIRREA • Limitations of FIRREA

  8. Risk-Based Capital Guidelines

  9. Calculating Net Worth for S&L’s • Period 1: 1-year market rate=7%, 30-year market rate=9% • Assets • 30-year mortgages, 9% coupon – BV=$50,000,000 • Building and Land – BV=$5,000,000 • Liabilities • 1-year CDs at 1-year market rate – BV=$50,000,000 • Equity = ? • Period 2: 1-year market rate=8%, 30-year market rate=10% • Assets: • 30-year mortgages, 9% coupon – BV=$50,000,000 • Building and Land – BV=$5,000,000 • Liabilities: • 1-year CDs at 1-year market rate – BV=$50,000,000 • Equity = ?

  10. The Development of Mortgage Markets • 1990’s – Dominance of the Secondary Market • 2000’s – Continued Dominance of the Secondary Market, Development of Sub-prime markets, and the housing crunch

More Related