The Demand for Home Mortgage Debt and the Income Tax

The goal of this paper is to learn more about the demand for the amount of mortgage debt owed by United States home owners. Mortgage debt is defined to be the amount of outstanding household debt secured by the owner’s principal residence; mortgages for second homes and other real estate are not considered, but second mortgages and home equity loans are. The analysis focuses on the behavior of individual households and examines variations in the their demand for mortgage debt with respect to a variety of characteristics such as household income, age, education, and other characteristics of the household. Of particular interest is the responsiveness of the demand for mortgage debt to the tax rate at which interest on mortgage and consumer debt can be deducted. The 1983 and 1989 Surveys of Consumer Finance are used to estimate the demand for mortgage debt. The analysis offers strong support for the hypothesis that the demand for mortgage debt is highly responsiveness to a change in the rate at which mortgage interest can be deducted. As such, the elimination of the mortgage interest deduction can be expected to lead some households to shift away from the financing of owner-occupied housing with mortgage debt and toward the use of their own assets (equity finance)

Using Recurrence Probabilities to Estimate the Volume of Multifamily Mortgage Originations

This study uses recurrence probabilities to generate forecasts of the volume of multifamily mortgage originations for the period 1992-2002. The approach concentrates on predicting the volume of property sales using the baseline of a multifamily prepayment hazard estimation to generate the predicted cohort-specific proportion of calendar sales in a given year. The forecast for the volume of originations depends strongly on the definition of the relevant mortgage population. A definition that excludes assumptions but otherwise includes all properties selling between 1971 and 1991 in which a first mortgage was used in its acquisition yields a forecast of $47.2 billion for 1997. A more restrictive definition that approximates the pool of loans covered by HMDA leads to a forecast of$23.5 billion for 1997

What We Know About Multifamily Mortgage Originations and Why We Care

The three publicly available data sets on multifamily mortgage originations are examined and compared in an attempt to resolve the more than $20 billion discrepancy between the published estimates of the size of the conventional conforming multifamily lending market. The data are from the Survey of Mortgage Lending Activity, the Home Mortgage Disclosure Act data, and the 1991 Residential Finance Survey. The analyses show that all three data sets have substantial weaknesses, and that the primary source of the differences in estimates is due to differences in the populations covered. The 1993 multifamily mortgage originations volume is estimated to be about$30 billion

Estimating the Volume of Multifamily Mortgage Originations By Commercial Banks Using the Survey of Mortgage Lending Activity and the Home Mortgage Disclosure Act Data

Two public data sets on multifamily mortgage originations are used to resolve the $15 billion discrepancy between the published estimates of the size of the multifamily lending market covered by commercial banks. The data are from the Survey of Mortgage Lending Activity and the Home Mortgage Disclosure Act. The analyses show the primary sources of the differences in the estimates are differences in the populations covered, nonreporting biases, and the methods used to expand the reported values to aggregate values. The 1993 multifamily mortgage originations volume by commercial banks is estimated to be about$7-8 billion

GSE Activity, FHA Feedback, and Implications for the Efficacy of the Affordable Housing Goals

Abstract There is a seeming paradox about the "affordable housing goals": GSE activities in targeted communities have increased under the goals but there has been little measurable improvement in housing market conditions in these communities. This paper seeks to reconcile this paradox by focusing on linkage between GSE purchases and FHA activities. We build a simple model based on credit rationing theory that suggests that GSE activities can have a feedback effect on FHA. More aggressive GSE pursuit of targeted borrowers under the affordable housing goals induces potential FHA borrowers with best credit quality to use the conventional market. In response, the FHA applies more strict underwriting standards under new market equilibrium, which results in reduced loan volumes. On balance, these effects can offset and make credit supply and homeownership effectively unchanged. Empirical evidence on changes in GSE and FHA lending after affordable housing goals were made more binding is found to be consistent with the theoretical predictions

Effect of Overground Training Augmented by Mental Practice on Gait Velocity in Chronic, Incomplete Spinal Cord Injury

OBJECTIVE: To compare efficacy of a regimen combining mental practice (MP) with overground training with the efficacy of a regimen comprised of overground training only on gait velocity and lower extremity motor outcomes in individuals with chronic (> 12 months post injury), incomplete, spinal cord injury (SCI). DESIGN: Randomized controlled, single blinded, study SETTING: Outpatient rehabilitation laboratories located in the Midwestern and Western United States PARTICIPANTS: 18 subjects with chronic, incomplete SCI INTERVENTIONS: Subjects were randomly assigned to receive: (a) Overground Training only (OT), occurring 3 days/week for 8 weeks; or (b) OT augmented by MP (MP + OT), during which randomly assigned subjects listened to a mental practice audio recording directly following OT sessions. MAIN OUTCOME MEASURES: Subjects were administered a test of gait velocity as well as the Tinetti Performance Oriented Mobility Assessment (POMA), Spinal Cord Injury Independence Measure (SCIM), and Satisfaction with Life Scale (SWLS) on 2 occasions before intervention, 1 week after intervention, and 12 weeks after intervention. RESULTS: A significant increase in gait velocity was exhibited across subjects at both 1 week post-therapy (p=0.0046) and at 12 weeks post-therapy (p=0.0056). However, no differences were seen in intervention response at either 1 or 12 weeks post intervention among subjects in the MP + OT versus the OT groups. CONCLUSION: Overground training was associated with significant gains in gait velocity, and that these gains were not augmented by further addition of mental practice

The time costs of consumption: An empirical investigation

In the standard economic model, a representative utility maximizer chooses quantities of consumption, asset holdings and labor force participation without regard to transaction costs. Such an assumption implies that the purchase of goods and services requires only one real resource, money. This research relaxes the assumption of zero transaction costs in consumption such that time resources, in addition to money, are used up when individuals transact in the goods markets. An intertemporal model of household choice is developed and estimated to measure the responsiveness of transaction costs to changes in consumption and money holdings. Estimates using a two and three year panel from the Surveys of Consumer Finances (1983-1989) suggest that increases in money holdings reduce transaction time. In addition, the existence of economies of scale in consumption may influence transaction cost. The model generates labor and leisure supply elasticities which suggest that households are highly responsive to wage changes in the presence of consumption transaction costs. The model is also estimated with U.S. time series data over the 1959 to 1994 period. Time series estimates of the recovered transaction technology parameters suggest that time costs are highly responsive to changes in M1 money, yet less responsive to changes in aggregate consumption. The main contribution to the monetary literature is the estimation of parameters which capture the concavity and degree of homogeneity of the transaction technology. Estimates from the household data suggest that the technology is most likely a member of the constant returns to scale functional family. Estimates from U.S. aggregate time series lack a definitive position on the scale of the transactions technology. The degree of homogeneity of the transaction technology is systematic to the specification of the co-integrating specification

Intertemporal Substitution, Money, and Aggregate Labor Supply.

This study investigates the macroeconometric credibility of the intertemporal substitution hypothesis. It extends the usual formulation by considering money within the representative consumer's life cycle decision. The authors also provide measures of the real wage rate and asset returns based upon interpretation of the constraint as consumption-saving behavior. Estimation with quarterly U.S. data generates plausible and significant estimates of the structural parameters. The findings indicate elastic labor supply response to the wage rate but mixed results with respect to nominal returns. The estimates are reasonably robust to alternative measures of consumption, money, leisure, and rates of return. Copyright 1996 by Ohio State University Press.