Home Equity Insurance

Home equity insurance policies, policies insuring homeowners against declines in the price of their homes, would bear some resemblance both to ordinary insurance and to financial hedging vehicles. A menu of choices for the design of such policies is presented here, and conceptual issues are discussed. Choices include pass-through futures and options, in which the insurance company in effect serves as a retailer to homeowners of short positions in real estate futures markets or of put options on real estate. Another choice is a life-event-triggered insurance policy, in which the homeowner pays regular fixed insurance premia and is entitled to a claim if both there is a sufficient decline in the real estate price index and a specified life event (such as a move beyond a certain geographical distance) occurs. Pricing of the premia to cover loss experience is derived, and tables of break-even policy premia are shown, based on estimated models of Los Angeles housing prices 1971- 91.

Moral Hazard in Home Equity Conversion

Home equity conversion as presently constituted or proposed usually does not deal well with the potential problem of moral hazard. Once homeowners know that the risk of poor market performance of their homes is borne by investors, they have an incentive to neglect to take steps to maintain the homes' values. They may thus create serious future losses for the investors. A calibrated model for assessing this moral hazard risk is presented that is suitable for a number of home equity conversion forms: 1) reverse mortgages, 2) home equity insurance, 3) shared appreciation mortgages, 4) housing partnerships, 5) shared equity mortgages and 6) sale of remainder interest. Modifications of these forms involving real estate price indices are proposed that might deal better with the problem of moral hazard.Reverse mortgages, home equity insurance, shared appreciation mortgages, housing partnerships, shared equity mortgages, sale of remainder interest, moral hazard, real estate price indices, home maintenance, home improvements

Mortgage Default Risk and Real Estate Prices: The Use of Index-Based Futures and Options in Real Estate

Evidence is shown, using US foreclosure data by state 1975-93, that periods of high default rates on home mortgages strongly tend to follow real estate price declines or interruptions in real estate price increase. The relation between price decline and foreclosure rates is modelled using a distributed lag. Using this model, holders of residential mortgage portfolios could hedge some of the risk of default by taking positions in futures or options markets for residential real estate prices, were such markets to be established.

Moral Hazard in Home Equity Conversion

Home equity conversion as presently constituted or proposed usually does not deal well with the potential problem of moral hazard. Once homeowners know that the risk of poor market performance of their homes is borne by investors, they have an incentive to neglect to take steps to maintain the homes’ values. They may thus create serious future losses for the investors. A calibrated model for assessing this moral hazard risk is presented that is suitable for a number of home equity conversion forms: 1) reverse mortgages, 2) home equity insurance, 3) shared appreciation mortgages, 4) housing partnerships, 5) shared equity mortgages and 6) sale of remainder interest. Modifications of these forms involving real estate price indices are proposed that might deal better with the problem of moral hazard

Index-Based Futures and Options Markets in Real Estate

Most institutional and individual portfolios are very undiversified in real estate: many hold no real estate at all, many have holdings highly concentrated in certain regions or types of real estate. The risk of these concentrated holdings is not hedged. We propose here that cash-settled futures and options markets be opened on real estate to better allow diversification and hedging, and show that these markets solve problems that have hampered other real estate hedging media in the past. Related institutions, such as home equity insurance, might develop around the futures and options markets. The establishment of these markets is likely to increase the quantity of reproducible real estate, and lower rents on real estate. It may also reduce the amplitude of speculative real estate price movements and dampen the business cycle

Mortgage Default Risk and Real Estate Prices: The Use of Index-Based Futures and Options in Real Estate

Evidence is shown, using US foreclosure data by state 1975-93, that periods of high default rates on home mortgages strongly tend to follow real estate price declines or interruptions in real estate price increase. The relation between price decline and foreclosure rates is modelled using a distributed lag. Using this model, holders of residential mortgage portfolios could hedge some of the risk of default by taking positions in futures or options markets for residential real estate prices, were such markets to be established

Mortgage Default Risk and Real Estate Prices: The Use of Index-Based Futures and Options in Real Estate

Evidence is shown, using US foreclosure data by state 1975-93, that periods of high default rates on home mortgages strongly tend to follow real estate price declines or interruptions in real estate price increase. The relation between price decline and foreclosure rates is modelled using a distributed lag. Using this model, holders of residential mortgage portfolios could hedge some of the risk of default by taking positions in futures or options markets for residential real estate prices, were such markets to be established.

Index-Based Futures and Options Markets in Real Estate

Most institutional and individual portfolios are very undiversified in real estate: many hold no real estate at all, many have holdings highly concentrated in certain regions or types of real estate. The risk of these concentrated holdings is not hedged. We propose here that cash-settled futures and options markets be opened on real estate to better allow diversification and hedging, and show that these markets solve problems that have hampered other real estate hedging media in the past. Related institutions, such as home equity insurance, might develop around the futures and options markets. The establishment of these markets is likely to increase the quantity of reproducible real estate, and lower rents on real estate. It may also reduce the amplitude of speculative real estate price movements and dampen the business cycle.Real estate, prices, portfolio choice

Pesquisa que envolve a comunidadeatravés das lentes do fechamento escolar: Oportunidades, desafios, contribuições e perguntas persistentes

This article expands upon and problematizes the practice of community-engaged research (CES) through the lens of school closings. Rather than employ a one-dimensional view of CES that portrays university researchers and community partners as collaborating equally on all stages of the research, we suggest a broader, more flexible understanding that incorporates various contextual factors. Drawing on local examples, from New York City and Baltimore, and one national effort to resist school closings, we  present three forms of CES: participatory action research (PAR), in which university researchers and community partners collaboratively engaged in almost all aspects of the process; the engaged learner, in which the researcher documented a community organizing campaign with the full support of the campaign organizers; and a grassroots listening project implemented without university partners. In each case, participants had to navigate the thorny issues of power differentials, race and racism, ownership and voice, and presentation and representation. Difficulties notwithstanding, CES has made important contributions to both the literature on and practice of school closings. We conclude the article with a discussion of some of the lingering tensions that characterize community-engaged scholarship.Este artículo expande y problematiza la práctica de la investigación que compromete a la comunidad. (CES) a través del lente del cierre de escuelas. En lugar de emplear una visión unidimensional del CES que describe a los investigadores universitarios y socios comunitarios como colaboradores en todas las etapas de la investigación, sugerimos una comprensión más amplia y flexible que incorpore varios factores contextuales. A partir de ejemplos locales, de la ciudad de Nueva York y Baltimore, y de un esfuerzo nacional para resistir el cierre de escuelas, presentamos tres formas de CES: investigación de acción participativa (PAR), en la que investigadores universitarios y socios comunitarios colaboran en casi todos los aspectos de la proceso; el participante comprometido, en el que el investigador documentó una campaña de organización comunitaria con el apoyo total de los organizadores de la campaña; y un proyecto implementado sin socios universitarios. En cada caso, los participantes tuvieron que navegar por los espinosos problemas de los diferenciales de poder, la raza y el racismo, la propiedad y la voz, y la presentación y representación. A pesar de las dificultades, el CES ha hecho importantes contribuciones a la literatura y la práctica del cierre de escuelas. Concluimos el artículo con una discusión de algunas de las tensiones persistentes que caracterizan a los investigacións que compromete a la comunidad. Este artigo expande e problematiza a prática de pesquisa que envolve a comunidade (CES) através das lentes do fechamento escolar. Em vez de usar uma visão unidimensional do CES que descreve os pesquisadores da universidade e os parceiros da comunidade como parceiros em todas as etapas da pesquisa, sugerimos um entendimento mais amplo e flexível que incorpora vários fatores contextuais. A partir de exemplos locais, de Nova York e Baltimore, e de um esforço nacional para resistir ao fechamento de escolas, apresentamos três formas de CES: pesquisa de ação participativa (PAR), na qual pesquisadores universitários e parceiros da comunidade colaboram. em quase todos os aspectos do processo; o participante comprometido, no qual o pesquisador documentou uma campanha de organização comunitária com o total apoio dos organizadores da campanha; e um projeto implementado sem parceiros universitários. Em cada caso, os participantes tiveram que navegar pelos espinhosos problemas de diferenciais de poder, raça e racismo, propriedade e voz, e apresentação e representação. Apesar das dificuldades, o CES fez contribuições importantes para a literatura e a prática do fechamento de escolas. Concluímos o artigo com uma discussão sobre algumas das tensões persistentes que caracterizam os pesquisa que envolve a comunidade

Moral Hazard in Home Equity Conversion

Home equity conversion as presently constituted or proposed usually does not deal well with the potential problem of moral hazard. Once home-owners know that the risk of poor market performance of their homes is borne by investors, they have an incentive to neglect to take steps to maintain the homes' values. They may thus create serious future losses for the investors. A calibrated model for assessing this moral hazard risk is presented that is suitable for a number of home equity conversion forms: 1) reverse mortgages, 2) home equity insurance, 3) shared appreciation mortgages, 4) housing partnerships, 5) shared equity mortgages and 6) sale of remainder interest. Modifications of these forms involving real estate price indices are proposed that might deal better with the problem of moral hazard.