Comparison of Two Affordable Housing Finance Channels

摘要: This paper demonstrates, theoretically and empirically, that shared equity mortgages are a better affordable housing solution than high-leverage lending, in terms of both default reduction cost to mortgage insurers. Their effectiveness reducing strategic is increased when contracts conducted expensive house price areas, during bubble periods, with long holding terms, or for borrowers high expected returns. The develops numerical examples the use simulation back-testing, which applied Los Angeles. results show Angeles could have avoided many its defaults recent recession if it had used as an alternative conventional low down-payment mortgages.