Mortgage-Backed Securities and Mortgages

A Financial Analysis of Consumer Mortgage Decisions
Mortgage Bankers Association (June 2009)

With housing prices falling and mortgage rates near historic lows, many homeowners are tempted to take advantage of this by buying or refinancing. However, due the complexity of the mortgage market, despite all the available disclosures, many consumers are still left in the dark, and by not considering all the necessary facts, they often leaves thousands of dollars on the table.

This guidebook applies standard, well understood approaches and tools used by financial professionals, to provide financial planners, housing counselors and consumers with a clear road-map, to make the best decision on how to choosing a mortgage, when to refinance a mortgage, and when to pay down a mortgage versus investing.

Related Analytics: Mortgage Calculators

Mortgage Servicing Rights and Interest Rate Volatility
Mortgage Risk (May 2008)

Standard prepayment models produce faulty results when valuing mortgage servicing rights. More reliable conclusions are obtained from an option-based prepayment model that includes volatility of interest rates as an input.

Related Analytics: CLEAN™ MBS Prepayment and Valuation Model, Mortgage Calculators

Optimal Mortgage Refinancing: Application of Bond Valuation Tools to Household Risk Management
Applied Financial Economics Letters (Vol. 1, 2008)

Concepts long known from research on callable bonds help provide a rigorous and robust solution to the elusive question of when is it optimal for a borrower to refinance a residential mortgage.

Related Analytics: CLEAN™ MBS Prepayment and Valuation Model, Mortgage Calculators

The True Cost of No-Cost Mortgages
Mortgage Risk (October 2007)

Misgauging the likely prepayment behavior of no-cost loans (whose closing costs are wrapped into a higher interest rate) could leave banks with assets they cannot securitize, or investors with securities worth less than they bargained for.

Related Analytics: Mortgage Calculators

A Pointer on Points
OR/MS Today (June 2007)

Should a homebuyer pay upfront points in return for a lower mortgage rate? A proper answer requires comparing each alternative’s “option adjusted APR” – a refinement of the standard mortgage rate that adds the value of the option to refinance if interest rates decline.

Related Analytics: Mortgage Calculators

Is There a Financial Engineer in the House?
Financial Engineering News (March/April 2006)

Financial engineering tools aren’t just for institutions. User-friendly calculators from Andrew Kalotay Associates combine option valuation and option adjusted spread analysis to help consumers make informed decisions on mortgage selection and refinancing.

Related Analytics: Mortgage Calculators

An Option-Theoretic Prepayment Model for Mortgages and Mortgage-Backed Securities
International Journal of Theoretical and Applied Finance (December 2004)

Market prices of MBS are accurately captured by a standard valuation model for callable bonds that incorporates a simple yield curve model and a rigorously constructed option-based model for prepayment behavior.

Related Analytics: CLEAN™ MBS Prepayment and Valuation Model

Ginnie Mae and the Secondary Mortgage Market: An Integral Part of the American Economic Engine
 Ginnie Mae

This monograph explains Ginnie Mae’s role in connecting global capital markets to the U.S. housing market, promoting affordable housing in America.

Related Analytics: CLEAN™ MBS Prepayment and Valuation Model

Syndicate content