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

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.

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.

Characteristics of ADHD symptom response/remission in a clinical trial of methylphenidate extended release

Clinical trials in attention-deficit/hyperactivity disorder (ADHD) have typically measured outcome using clinician ratings on the Attention-Deficit/Hyperactivity Disorder Rating Scale, Fourth Edition (ADHD-RS-IV) and the Clinical Global Impression-Improvement (CGI-I) scale. Remission has been defined as an endpoint score of less than or equal to 18 on the ADHD-RS-IV (or a mean score of 1). Responders have been defined as patients who achieve a CGI-I score of much or very much improved (1 or 2). There is a lack of agreement in the literature on what percent change in symptoms on the ADHD-RS-IV should be used to define improvement or remission. This study uses data from a clinical trial of a methylphenidate extended release (MPH-MLR; Aptensio XR®) phase III clinical trial to attempt to determine the percent change of symptoms that best corresponds with improvement and remission. Symptom remission at endpoint (ADHD-RS-IV total score ≤18) was most closely aligned with a ≥46% reduction in ADHD-RS-IV total score. Clinical improvement was most closely aligned with a ≥40% reduction in ADHD-RS-IV total score. The three different measures of outcome were strongly aligned during double blind and open label treatment, and were independent of subtype status. Our data suggest that at least 40% improvement in symptoms is needed to achieve a robust response at endpoint

The Cell-Cycle Regulatory Protein p21CIP1/WAF1 Is Required for Cytolethal Distending Toxin (Cdt)-Induced Apoptosis.

The Aggregatibacter actinomycetemcomitans cytolethal distending toxin (Cdt) induces lymphocytes to undergo cell-cycle arrest and apoptosis; toxicity is dependent upon the active Cdt subunit, CdtB. We now demonstrate that p21CIP1/WAF1 is critical to Cdt-induced apoptosis. Cdt induces increases in the levels of p21CIP1/WAF1 in lymphoid cell lines, Jurkat and MyLa, and in primary human lymphocytes. These increases were dependent upon CdtB's ability to function as a phosphatidylinositol (PI) 3,4,5-triphosphate (PIP3) phosphatase. It is noteworthy that Cdt-induced increases in the levels of p21CIP1/WAF1 were accompanied by a significant decline in the levels of phosphorylated p21CIP1/WAF1. The significance of Cdt-induced p21CIP1/WAF1 increase was assessed by preventing these changes with a two-pronged approach; pre-incubation with the novel p21CIP1/WAF1 inhibitor, UC2288, and development of a p21CIP1/WAF1-deficient cell line (Jurkatp21-) using clustered regularly interspaced short palindromic repeats (CRISPR)/cas9 gene editing. UC2288 blocked toxin-induced increases in p21CIP1/WAF1, and JurkatWT cells treated with this inhibitor exhibited reduced susceptibility to Cdt-induced apoptosis. Likewise, Jurkatp21- cells failed to undergo toxin-induced apoptosis. The linkage between Cdt, p21CIP1/WAF1, and apoptosis was further established by demonstrating that Cdt-induced increases in levels of the pro-apoptotic proteins Bid, Bax, and Bak were dependent upon p21CIP1/WAF1 as these changes were not observed in Jurkatp21- cells. Finally, we determined that the p21CIP1/WAF1 increases were dependent upon toxin-induced increases in the level and activity of the chaperone heat shock protein (HSP) 90. We propose that p21CIP1/WAF1 plays a key pro-apoptotic role in mediating Cdt-induced toxicity

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

Shale oil : potential economies of large-scale production, preliminary phase

Producing shale oil on a large scale is one of the possible alternatives for reducing dependence of the United States on imported petroleum. Industry is not producing shale oil on a commercial scale now because costs are too high even though industry dissatisfaction is most frequently expressed about "non-economic" barriers: innumerable permits, changing environmental regulations, lease limitations, water rights conflicts, legal challenges, and so on. The overall purpose of this study is to estimate whether improved technology might significantly reduce unit costs for production of shale oil in a planned large-scale industry as contrasted to the case usually contemplated: a small industry evolving slowly on a project-by-project basis. In this preliminary phase of the study, we collected published data on the costs of present shale oil technology and adjusted them to common conditions; these data were assembled to help identify the best targets for cost reduction through improved large-scale technology They show that the total cost of producing upgraded shale oil (i.e. shale oil accpetable as a feed to a petroleum refinery) by surface retorting ranges from about $18 to$28/barrel in late '78 dollars with a 20% chance that the costs would be lower than and 20% higher than that range. The probability distribution reflects our assumptions about ranges of shale richness, process performance, rate of return, and other factors that seem likely in a total industry portfolio of projects. About 40% of the total median cost is attributable to retorting, 20% to upgrading, and the remaining 40% to resource acquisition, mining, crushing, and spent shale disposal and revegetation. Capital charges account for about 70% of the median total cost and operating costs for the other 30%. There is a reasonable chance that modified in-situ processes (like Occidental's) may be able to produce shale oil more cheaply than surface retorting, but no reliable cost data have been published; in 1978, DOE estimated a saving of roughly $5/B for in-situ. Because the total costs of shale oil are spread over many steps in the production process, improvements in most or all of those steps are required if we seek a significant reduction in total cost. A June 1979 workshop of industry experts was held to help us identify possible cost-reduction technologies. Examples of the improved large-scale technologies proposed (for further evaluation) to the workshop were: - Instead of hydrotreating raw shale oil to make syncrude capable of being refined conventionally, rebalance all of a refinery's processes (or develop new catalysts/processes less sensitive to feed nitrogen) to accommodate shale oil feed -- a change analogous to a shift from sweet crude to sour crude. - Instead of refining at or near the retort site, use heated pipelines to move raw shale oil to existing major refining areas. - Instead of operating individual mines, open-pit mine all or much of the Piceance Creek Basin. - Instead of building individual retorts, develop new methods for mass production of hundreds of retorts

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

Intermittent dislocation flow in viscoplastic deformation

The viscoplastic deformation (creep) of crystalline materials under constant stress involves the motion of a large number of interacting dislocations. Analytical methods and sophisticated `dislocation-dynamics' simulations have proved very effective in the study of dislocation patterning, and have led to macroscopic constitutive laws of plastic deformation. Yet, a statistical analysis of the dynamics of an assembly of interacting dislocations has not hitherto been performed. Here we report acoustic emission measurements on stressed ice single crystals, the results of which indicate that dislocations move in a scale-free intermittent fashion. This result is confirmed by numerical simulations of a model of interacting dislocations that successfully reproduces the main features of the experiment. We find that dislocations generate a slowly evolving configuration landscape which coexists with rapid collective rearrangements. These rearrangements involve a comparatively small fraction of the dislocations and lead to an intermittent behavior of the net plastic response. This basic dynamical picture appears to be a generic feature in the deformation of many other materials. Moreover, it should provide a framework for discussing fundamental aspects of plasticity, that goes beyond standard mean-field approaches that see plastic deformation as a smooth laminar flow