Search Results
Conference Paper
Commentary: improving secondary markets in rural America
Working Paper
GSEs, mortgage rates, and secondary market activities
Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) that securitize mortgages and issue mortgage-backed securities (MBS). In addition, the GSEs are active participants in the secondary mortgage market on behalf of their own investment portfolios. Because these portfolios have grown quite large, portfolio purchases (in addition to MBS issuance) are often thought to be an important force in the mortgage market. Using monthly data from 1993 to 2005 we estimate a VAR model of the relationship between GSE secondary market activities and mortgage interest rate spreads. We find ...
Journal Article
The rise of the originate-to-distribute model and the role of banks in financial intermediation
This is the second article in a series which explores the changing role of banks in the financial intermediation process. It accompanies a Liberty Street Blog series. Both discuss the complexity of the credit intermediation chain associated with securitization and note the growing participation of nonbank entities within it. These series also discuss implications for monitoring and rulemaking going forward. In this article, the authors show that, beginning in the early 1990s, lead banks increasingly used the originate-to-distribute model in their corporate lending business and that the ...
Report
Bank loan sales: a new look at the motivations for secondary market activity
Bank lending traditionally involves the extension of credit that is held by the originating bank until maturity. Loan sales allow banks to deviate from this pattern by transferring loans in part or in their entirety from their own books to those of another institution. This paper uses a new methodology to test the validity of two hypotheses regarding banks' motivations for selling and buying loans: (1) the comparative advantage hypothesis, that banks with a comparative advantage in originating loans sell and those with a comparative advantage in funding loans buy, and (2) the diversification ...
Journal Article
Buy, sell, or hold? Valuing cash flows from mortgage lending
Journal Article
Developments in the secondary mortgage market
Journal Article
Volatile mortgage rates - a new fact of life?
Mortgage interest rates now move much more closely with capital market rates than in the past. This important development stems in part from the removal of mortgage usury ceilings. But the main reason for the closer relationship of mortgage rates to capital market rates is growth of the secondary mortgage market.
Journal Article
The secondary market for community development loans
Proceedings of the Conference on the Secondary Market for Community Development Loans. At the Federal Reserve?s September conference in Washington, D.C., one participant remarked, ?There are lakes of capital and lakes of need.? How to channel one to the other was the central question we wrestled with at the two-day conference. This article attempts to capture the major themes and ideas from those discussions. It starts with an overview, then explores why community development finance needs to evolve, and concludes with strategies to achieve next steps.
Journal Article
Growing pains
Proceedings of the Conference on the Secondary Market for Community Development Loans. <p> Much has been said about the challenges of selling pools of loans into the capital markets via securitization or other techniques. In our experience, the actual sale is often the least difficult part of the process. The reason is that organizations can draw on the skills of a range of experts who can help with that part of the process. Attorneys are available who can guide organizations through the complexities of securities law; financial consultants offer advice regarding the proper accounting under ...
Working Paper
Long-Term Finance and Investment with Frictional Asset Markets
Trading frictions in financial markets affect more long- than short-term bonds generating an upward sloping yield curve. Long-term financing is more expensive in economies with higher trading frictions so firms choose to borrow and invest in shorter horizons and lower productivity projects. The theory guides a new identification of the slope of liquidity spread in the data. We measure and calibrate the model for the US, and counterfactual exercises suggest that variations in trading frictions can have significant effects on maturity choices and investment. A policy intervention improves ...