Mortgage Brokers,Origination Fees,Price Transparency and Competition

This article examines the dynamics between mortgage broker competition, origination fees and price transparency. A reverse first‐price sealed‐bid auction model is used to motivate broker pricing behavior. Confirming the model predictions, our empirical analysis shows that increased mortgage brokerage competition at the Metropolitan Statistical Area level leads to lower fees. The findings are robust to different measures of fees as well as different measures of competition. We also provide evidence that broker competition reduces mortgage origination fees on retail (nonbrokered) loans as well. In addition, our results indicate that pricing complexity is an important determinant of fees, and increased broker competition is associated with a higher probability of a loan being priced with transparency. Our results suggest that mortgage brokers increase competition and lower fees in the mortgage market.     

REIT Capital Budgeting and Equity Marginal q

Equity marginal  q  is the change in the market value of a company's equity in response to a one-unit unexpected change in its asset base. Hence, it is a profitability index that evaluates a firm's capital budgeting decisions at the margin. We estimate the equity marginal  q  for real estate–managing public corporations, namely, real estate investment trusts (REITs), in an attempt to understand how the various costs and benefits of being a public corporation play a role in managing this important asset class. Using the universe of equity REITs for the period from 1993 to 2005, we find that REITs with greater idiosyncratic volatility, higher stock turnover and smaller bid-ask spread have a higher equity marginal  q . In addition, both the holdings of institutional investors and their investment horizons are respectively positively related to equity marginal  q.  With these firm characteristics taken into account, firm size is found to be negatively related to equity marginal  q . Our findings are economically important as well, because the equity marginal  q  ratio alone accounts for approximately one-third of the total REIT shareholder wealth change during the study period.     

Managed Mental Health Care: Stakeholder Effects and Policy Implications

ABSTRACT: During the past several years, healthcare delivery in the United States has shifted from a primarily fee-for-service system toward managed care. Mental health care has been affected disproportionately by this trend. The existing literature on managed mental health care is abundant, but narrowly focused. The purpose of this study is to take a broader public-policy approach, considering simultaneously the effects on system stakeholders: patients, providers, employers, insurers, and society.     

Modeling the Conditional Probability of Foreclosure in the Context of Single-Family Mortgage Default Resolutions

Both empirical and pricing-simulation models of mortgage default focus on foreclosure in a one-step decision framework. Such models are misspecified to the extent that mortgage default and foreclosure are two separate decisions or events, where foreclosure is but one outcome of a default episode. This study examines the dynamics of mortgage borrower default episodes using a large sample of FHA-insured single-family mortgages. We estimate the influence of borrower characteristics, mortgage terms, and economic conditions on probabilities of various resolutions, highlighting under what conditions foreclosure is more likely to result from mortgage default.     

Righteousness and Profitableness: The Moral Choices of Contemporary Confucian Entrepreneurs

This paper explores the relationship of various trait emotions to the ethical choices of 189 college students who completed a managerial decision-making task as part of an in-basket exercise in a laboratory setting. Prior research regarding emotion influences on ethical decision-making and linkages between emotions and cognition informed hypotheses about how different types of emotions impact ethical choices. Findings supported our expectations that positive and negative emotions classified as active would be more strongly related to interpersonally-directed ethical choices than to organizationally-directed ones, and that passive emotions would be less related to ethical choices than active emotions. Implications for ethical decision-making research and organizational practices are discussed.     

A THEORETICAL ANALYSIS OF DESIGN ISSUES IN MEDICAL SAVINGS ACCOUNTS: THE POLICY IMPLICATIONS

Abstract: Numerous methods for helping consumers deal with medical care costs have been suggested. One way that has been discussed is the use of Medical Saving Accounts. A pilot program introducing Medical Spending Accounts was passed by Congress as part of the Health Insurance Reform Act of 1996. The authors review the major points of this program and attempt to examine what impact this program could have on medical care cost.     

Asymmetric Perceptions of Ethical Frameworks of Men and Women in Business and Nonbusiness Settings

This paper examines the relationship between individuals' gender and their ethical decision models. The study seeks to identify asymmetries in men's and women's approaches to ethical decision making and differences in their perceptions of how same-sex and other-sex managers would likely act in business and nonbusiness situations that present an ethical dilemma. Results indicate that the models employed by men and women differ in both business and nonbusiness settings, that both sexes report changing models when leaving business settings, and that women were better predictors of both sex's likely ethical models.     

Embedded Options in the Mortgage Contract

Loss mitigation is the process by which lenders attempt to minimize losses associated with foreclosure. As competition increases in the mortgage industry, lenders and servicers are under great pressure to adopt loss mitigation tactics rather than simply use foreclosure as the means of dealing with borrowers in default. This study presents a mortgage-pricing model that fully specifies all borrower options with respect to default, including the ability to reinstate the mortgage out of default. We document the impact of various loss mitigation programs, including forbearance and antideficiency judgments, as well as the value of credit on borrower default behavior.     

Justice Climate and Workgroup Outcomes: The Role of Coworker Fair Behavior and Workgroup Structure

Journal of Business Ethics - Research on justice climate demonstrates a consistent effect on workgroup outcomes such as job satisfaction, commitment, and performance. However, little research...     

Lender Steering in Residential Mortgage Markets

In this article, we examine the incentives for lenders to steer borrowers into piggyback loan structures to circumvent regulations requiring primary mortgage insurance (PMI) for loans with loan‐to‐value ratios (LTV) above 80%. Our empirical analysis focuses on propensity score‐matched portfolios of piggyback and single‐lien loans having the same combined LTV based on a full set of observed risk characteristics. Our results confirm that mortgages originated with the piggyback structure have much lower ex post default rates and faster prepayment speeds than corresponding PMI loans. We also find a significant causal effect of interstate banking deregulation on the growth of piggybacks in these years, confirming that the ex post performance gap is primarily driven by lender steering on the supply side and not by borrower self‐selection. We then perform a number of tests to explore different origination and execution channels of mortgage steering.