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The Evolution of Securitization in Multifamily Mortgage markets and Its Effect on lending Rates

Author

Listed:
  • Frank E. Nothaft

    (Freddie Mac)

  • James L. Freund

    (Mortgage Bankers Association of America, Washington, DC 20006-3438)

Abstract

Loan purchase and securitization by Freddie Mac, Fannie Mae and private-label commercial mortgage-backed securities (CMBS) grew rapidly during the 1990s and accounted for more than one-half of the net growth in multifamily debt over the decade. By facilitating the integration of the multifamily mortgage market into the broader capital markets, securitization helped to create new sources of credit as some traditional portfolio investors—savings institutions and life insurers—reduced their share of loan holdings. A model of commercial mortgage rates at life insurers, expressed relative to a comparable-term Treasury yield, was estimated over a twenty-two-year period. The parameter estimates supported an option-based pricing model of rate determination; proxies for CMBS activity showed no significant effect.

Suggested Citation

  • Frank E. Nothaft & James L. Freund, 2003. "The Evolution of Securitization in Multifamily Mortgage markets and Its Effect on lending Rates," Journal of Real Estate Research, American Real Estate Society, vol. 25(2), pages 91-112.
    • Handle: RePEc:jre:issued:v:25:n:2:2003:p:91-112
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    Citations

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    Cited by:

    1. Anthony Pennington‐Cross & Brent C Smith, 2020. "Early Termination of Small Loans in the Multifamily Mortgage Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 48(4), pages 1198-1233, December.
    2. Robin G. Newberger & Maude Toussaint-Comeau, 2017. "Minority-Owned Banks and Their Primary Local Market Areas," Economic Perspectives, Federal Reserve Bank of Chicago, issue 4, pages 1-31.
    3. Brent Ambrose & Michael Shafer & Yildiray Yildirim, 2018. "The Impact of Tenant Diversification on Spreads and Default Rates for Mortgages on Retail Properties," The Journal of Real Estate Finance and Economics, Springer, vol. 56(1), pages 1-32, January.
    4. Arturo José Galindo & Marc Hofstetter, 2008. "Mortgage Interest Rates, Country Risk and Maturity Matching in Colombia," Documentos CEDE 4544, Universidad de los Andes, Facultad de Economía, CEDE.

    More about this item

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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