True burden of drowning: compiling data to meet the new definition

The objective and aim of the study was to compile empirical data to quantify the underestimation of the true burden of drowning and to compare drowning rates using commonly reported codes compared with those revealed by use of the full range of drowning codes in ICD version 10. The authors reviewed mortality data (1999-2002) from Australia and the USA and compiled data to compare the burden of 'unintentional drowning' with that of 'all drowning'. In both Australia and the USA, drowning mortality is more than 35% higher when a full range of codes is examined. A more comprehensive representation of the drowning problem is needed to assist in strengthening prevention activities.     

ANALYSIS OF RANGELAND DEGRADATION USING STOCHASTIC DYNAMIC PROGRAMMING

Degradation of arid rangeland, and efforts to control that degradation, have become topical issues. However, the inherent characteristics of the rangeland, and the intertemporal nature of the problem, complicate the analysis of degradation issues in the search for more appropriate rangeland policies. Stochastic dynamic programming is examined as one means of allowing for those complexities. Using the case of the Queensland mulga rangelands, optimal stocking rates are shown to rise with lower property sizes, higher discount rates, higher wool prices and declining risk aversion. Importantly, the analysis reveals that a strategy of high stocking rates with the potential for rangeland degradation is an optimal response to the economic and social factors that confront graziers and is not an intertemporal information problem alone.     

Do Savings Associations Have a Special Commitment to Housing?

In this paper, we investigate whether elimination of the savings association charter might reduce lending to nontraditional mortgage borrowers. We present a theoretical model of lender portfolio choice, in which nontraditional lenders have some market power and traditional lenders are price takers in the mortgage market. The comparative statics indicate differences between nontraditional and traditional lenders in terms of their asset allocation responses to changes in borrower income and house prices. Empirical tests indicate the absence of such differences between savings associations and commercial banks, suggesting that elimination of the savings association charter would not impair lending to nontraditional mortgage borrowers.     

Automated Underwriting and the Profitability of Mortgage Securitization

This paper develops a game-theoretic model of mortgage securitization, which is then used to examine a potential effect of automated underwriting. The paper's primary supposition is that automated underwriting lowers the costs to competitive mortgage originators and a monopolist securitizer of identifying mortgage applicants who are good credit risks. Faced with lower underwriting costs, originators will screen a larger number of mortgage applicants in the hopes of holding more good risks in their portfolios and passing through more bad risks to the securitizer. This mounting adverse-selection problem causes the securitizer's expected revenues to decline; this effect can outweigh the cost-saving benefit of automated underwriting, causing the securitizer's return on equity to fall.     

Statement no.75 protecting taxpayers from risks of government-sponsored enterprises

Statement no.75 protecting taxpayers from risks of government-sponsored enterprisesSeptember 16, 1991     

How Does the Federal Reserve's Large‐Scale Asset Purchases (LSAPs) Influence Mortgage‐Backed Securities (MBS) Yields and U.S. Mortgage Rates?

We conduct an empirical analysis of the Federal Reserve's large‐scale asset purchases (LSAPs) on mortgage‐backed securities (MBS) yields and mortgage rates. We estimate a cointergrated, error‐correction model that links Federal Reserve securities purchases and stocks of Treasury and MBS securities to equilibrium MBS yields and mortgage rates. The Federal Reserve's accumulation of MBS and Treasury securities lowered MBS yields and mortgage rates by more than what would have been suggested by changes in market expectations alone, suggesting that portfolio rebalancing effects of LSAPs are an important consideration for monetary policy transmission. Our estimates also suggest that the Federal Reserve must hold a substantial market share of agency MBS or of Treasury securities to significantly lower MBS yields and in turn significantly lower mortgage rates.     

Did the Federal Reserve's MBS purchase program lower mortgage rates?

On November 25, 2008, the Federal Reserve announced it would purchase mortgage-backed securities (MBS). This program affected mortgage rates through three channels: (1) improved market functioning in both primary and secondary mortgage markets, (2) clearer government backing for Fannie Mae and Freddie Mac, and (3) anticipation of portfolio rebalancing effects. We use empirical pricing models for MBS yields and for mortgage rates to measure relative importance of channels: The first two were important during the height of the financial crisis, but the effects of the third depended on market conditions. Overall, the program put significant downward pressure on mortgage rates.     

GSEs,Mortgage Rates,and the Long-Run Effects of Mortgage Securitization

Our paper compares mortgage securitization undertaken by government-sponsored enterprises (GSEs) with that undertaken by private firms, with an emphasis on how each type of mortgage securitization affects mortgage rates. We build a model illustrating that market structure, government sponsorship, and the characteristics of the mortgages securitized are all important determinants of mortgage rates. We find that GSEs generally—but not always—lower mortgage rates, particularly when the GSEs behave competitively, because the GSEs implicit government backing allows them to sell securities without the credit enhancements needed in the private sector. Using our simulation model, we demonstrate that when mortgages eligible for purchase by the GSEs have characteristics similar to other mortgages, the GSEs implicit government-backing generates differences in mortgage rates similar to those currently observed in the mortgage market (which range between zero and fifty basis points). However, if the mortgages purchased by GSEs are less costly to originate and securitize, and if the GSEs behave competitively, then the simulated spread in mortgage rates can be much larger than that observed in the data.     

The Effect of Housing Government-Sponsored Enterprises on Mortgage Rates

We derive a theoretical model of how jumbo and conforming mortgage rates are determined and how the jumbo–conforming spread might arise. We show that mortgage rates reflect the cost of funding mortgages and that this cost of funding can drive a wedge between jumbo and conforming rates. Further, we show how the jumbo–conforming spread widens when mortgage demand is high or core deposits are not sufficient to fund mortgage demand, and tightens as the mortgage market becomes more liquid and realizes economies of scale. Using Mortgage Interest Rate Survey data for April 1997 through May 2003, we estimate that the government-sponsored enterprise funding advantage accounts for about 7 basis points of the 15–18 basis point jumbo–conforming spread.