Cost, Value, and Hybrid-Based Underwriting Criteria
AbstractThis study examines the correlation between loan-to-value ratios and probability of default, and tests alternative cost-based default models, using data from the portfolios of FSLIC and a major regional lender. The theoretical premises for the research are synthesized from a review of the linkages between supply and demand for space, and for capital; and of the appraisal process and its reliability. Two major conclusions are drawn from statistical evidence: (1) there is no apparent correlation between value-based underwriting criteria and between default, and (2) hard cost-based criteria correlate closely to probability of default.
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Bibliographic InfoArticle provided by American Real Estate Society in its journal Journal of Real Estate Research.
Volume (Year): 7 (1992)
Issue (Month): 2 ()
Contact details of provider:
Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
Web page: http://www.aresnet.org/
Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
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- L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
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