Essays on mortgage choice and housing economics

This dissertation consists of three self-contained chapters that study various interactions between the housing market, mortgage choice, and public policy. The first chapter studies how changes to the collateral value of real estate assets affect homeowner borrowing. While previous research has documented a positive relationship between house prices and home-equity based borrowing, a key empirical challenge has been to disentangle the role of collateral constraints from that of wealth effects in generating this relationship. To isolate the role of collateral constraints, I exploit the fully anticipated expiration of resale price controls created through an inclusionary zoning regulation in Montgomery County, Maryland. I estimate that the marginal propensity to borrow out of increases in housing collateral is between $0.04 and$0.13. The magnitude of this effect is correlated with a homeowner\u27s initial leverage and additional analysis of residential investment and ex-post loan performance further suggests that borrowers used some portion of the extracted funds to finance current consumption and investment expenditures. These results highlight the importance of collateral constraints for homeowner borrowing and suggest a potentially important role for house price growth in driving aggregate consumption. The second chapter, co-authored with Andrew Paciorek, provides novel estimates of the interest rate elasticity of mortgage demand by measuring the extent to which households bunch at a discrete jump in interest rates generated by the conforming loan limit. Our estimates imply that a 1 percentage point increase in the rate on a 30-year fixed-rate mortgage reduces first mortgage demand by between 2 and 3 percent. One-third of this response is driven by borrowers who take out second mortgages, which implies that total mortgage debt only declines by 1.5 to 2 percent. The third chapter, co-authored with Joseph Gyourko, Fernando Ferreira, and Wenjie Ding, uses extensive micro data to investigate whether contagion was an important factor in the last housing cycle. Our estimates provide evidence of contagion during the housing boom, but not during the bust. We also find that contagion effects are greater when transmitted from a larger to a smaller market, and are more important for the most elastically-supplied markets. Local fundamentals and expectations of future fundamentals have limited ability to account for our estimated effect

Measuring the welfare cost of asymmetric information in consumer credit markets

Information asymmetries are known in theory to lead to inefficiently low credit provision, yet empirical estimates of the resulting welfare losses are scarce. This paper leverages a randomized experiment conducted by a large fintech lender to estimate welfare losses arising from asymmetric information in the market for online consumer credit. Building on methods from the insurance literature, we show how exogenous variation in interest rates can be used to estimate borrower demand and lender cost curves and recover implied welfare losses. While asymmetric information generates large equilibrium price distortions, we find only small overall welfare losses, particularly for high-credit-score borrowers

Mutacin 1140 Lantibiotic Variants Are Efficacious Against Clostridium difficile Infection

Lantibiotics offer an untapped pipeline for the development of novel antibiotics to treat serious Gram-positive (+) infections including Clostridium difficile. Mutacin 1140 (MU1140) is a lantibiotic produced by Streptococcus mutans and acts via a novel mechanism of action, which may limit the development of resistance. This study sought to identify a lead compound for the treatment of C. difficile associated diarrhea (CDAD). Compounds were selected from a saturation mutagenesis library of 418 single amino acid variants of MU1140. Compounds were produced by small scale fermentation, purified, characterized and then subjected to a panel of assays aimed at identifying the best performers. The screening assays included: in vitro susceptibility testing [MIC against Micrococcus luteus, Clostridium difficile, vancomycin-resistant enterococci (VRE), Staphylococcus aureus, Streptococcus pneumonia, Mycobacterium phlei, and Pseudomonas aeruginosa; cytotoxicity screening on HepG2 hepatocytes; in vitro pharmacological profiling with the Safety Screen 44TM, metabolic and chemical stability in biologically relevant fluids (FaSSGF, FaSSIF and serum); and efficacy in vivo]. Several lantibiotic compounds had better MIC against C. difficile, compared to vancomycin, but not against other bacterial species tested. The Safety Screen 44TMin vitro pharmacological profiling assay suggested that this class of compounds has relatively low overall toxicity and that compound OG253 (MU1140, Phe1Ile) is not likely to present inadvertent off-target effects, as evidenced by a low promiscuity score. The in vitro cytotoxicity assay also indicated that this class of compounds was characterized by low toxicity; the EC50 of OG253 was 636 mg/mL on HepG2 cells. The half-life in simulated gastric fluid was >240 min. for all compound tested. The stability in simulated intestinal fluid ranged between a half-life of 5 min to >240 min, and paralleled the half-life in serum. OG253 ultimately emerged as the lead compound based on superior in vivo efficacy along with an apparent lack of relapse in a hamster model of infection. The lessons learned from this report are applicable to therapeutic lanthipeptides in general and may assist in the design of novel molecules with improved pharmacological, therapeutic and physicochemical profiles. The data presented also support the continued clinical development of OG253 as a novel antibiotic against CDAD that could prevent recurrence of the infection

OG716: Designing a fit-for-purpose lantibiotic for the treatment of <i>Clostridium difficile</i> infections

<div><p>Lantibiotics continue to offer an untapped pipeline for the development of novel antibiotics. We report here the discovery of a novel lantibiotic for the treatment of <i>C</i>. <i>difficile</i> infection (CDI). The leads were selected from a library of over 300 multiple substitution variants of the lantibiotic Mutacin 1140 (MU1140). Top performers were selected based on testing for superior potency, solubility, manufacturability, and physicochemical and/or metabolic stability in biologically-relevant systems. The best performers <i>in vitro</i> were further evaluated orally in the Golden Syrian hamster model of CDAD. <i>In vivo</i> testing ultimately identified OG716 as the lead compound, which conferred 100% survival and no relapse at 3 weeks post infection. MU1140-derived variants are particularly attractive for further clinical development considering their novel mechanism of action.</p></div

Hamster CDAD study design.

<p>Hamster CDAD study design.</p

Efficacy of lead compounds assessed <i>in vivo</i>.

<p>Golden Syrian hamsters (N = 6 per group) were infected on Day 1 and received a single subcutaneous injection of Clindamycin (10 mg/Kg) on Day 2. Test compounds at 20 mg/Kg in 5% mannitol were administered by oral gavage 3 times per day (TID), starting on Day 2 at 18 hours after Clindamycin treatment, for 5 consecutive days (Days 2 through 6). Vancomycin (positive control) was administered at 20 mg/kg QD in parallel, and the infection control group was dosed with vehicle alone. See <b><a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0197467#sec002" target="_blank">Materials and Methods</a></b>for details.</p