IDEAS home Printed from https://ideas.repec.org/p/ags/uerser/308066.html
   My bibliography  Save this paper

Prospects for a Secondary Market for Farm Mortgages

Author

Listed:
  • Hiemstra, Stephen W.
  • Koenig, Steven R.
  • Freshwater, David

Abstract

The success of a secondary market for farm mortgages depends on the underwriting standards adopted by the recently created Federal Agricultural Mortgage Corporation (Farmer Mac) and active participation of Farm Credit System (FCS) lenders. Development of underwriting standards and other administrative requirements in both the public and private sectors is likely to delay the initiation of market operations until late 1989. Tight underwriting standards and less than full participation of the FCS could delay active trading for several years after market operations begin. A secondary market is a financial market in which lenders sell mortgages to poolers who, in turn, market securities backed by those mortgages to investors. Loan sales allow lenders to recover most of the loan principal. Borrowers who meet Farmer Mac underwriting standards may therefore be able to get loans even when the supply of loanable funds is otherwise constrained. When loanable funds are more accessible, secondary market sales will increase competition among lenders and lower interest rates. Borrowers who do not meet Farmer Mac standards may either have to rely increasingly on Government credit programs or pay more for credit.

Suggested Citation

  • Hiemstra, Stephen W. & Koenig, Steven R. & Freshwater, David, 1988. "Prospects for a Secondary Market for Farm Mortgages," Agricultural Economic Reports 308066, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerser:308066
    DOI: 10.22004/ag.econ.308066
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/308066/files/aer603.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.308066?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Gunter, Lewell & Smathers, Webb M. & Ingram, Michael C. & Dubman, Robert, 1985. "Analysis of Economic Emergency Loan Allocations and Credit Market Expansion," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 17(2), pages 21-32, December.
    2. Stuart A. Gabriel, 1987. "Housing and mortgage markets: the post-1982 expansion," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Dec, pages 893-903.
    3. Lee, Hyunok & Chambers, Robert G., 1988. "Optimal farm credit pricing under asymmetric information," Technical Bulletins 312285, United States Department of Agriculture, Economic Research Service.
    4. Michael J. Moran, 1985. "The federally sponsored credit agencies: an overview," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jun, pages 373-388.
    5. Cho, Yoon Je, 1986. "Inefficiencies from Financial Liberalization in the Absence of Well-Functioning Equity Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(2), pages 191-199, May.
    6. Black, Deborah G & Garbade, Kenneth D & Silber, William L, 1981. "The Impact of the GNMA Pass-through Program on FHA Mortgage Costs," Journal of Finance, American Finance Association, vol. 36(2), pages 457-469, May.
    7. Jaffee, Dwight M & Rosen, Kenneth T, 1978. "Estimates of the Effectiveness of Stabilization Policies for the Mortgage and Housing Markets," Journal of Finance, American Finance Association, vol. 33(3), pages 933-946, June.
    8. William R. Keeton, 1986. "Deposit deregulation, credit availability, and monetary policy," Economic Review, Federal Reserve Bank of Kansas City, vol. 71(Jun), pages 26-42.
    9. Longmire, James L. & Morey, Art, 1983. "Strong Dollar Dampens Demand for U.S. Farm Exports," Foreign Agricultural Economic Report (FAER) 147219, United States Department of Agriculture, Economic Research Service.
    10. Hester, Donald D, 1979. "Customer Relationships and Terms of Loans: Evidence from a Pilot Survey: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 11(3), pages 349-357, August.
    11. R. Alton Gilbert & Courtenay C. Stone & Michael E. Trebing, 1985. "The new bank capital adequacy standards," Review, Federal Reserve Bank of St. Louis, vol. 67(May), pages 12-20.
    12. Howard L. Roth, 1988. "Volatile mortgage rates - a new fact of life?," Economic Review, Federal Reserve Bank of Kansas City, vol. 73(Mar), pages 16-28.
    13. Larry L. Janssen & Brian H. Schmiesing & Alan Schroeder, 1988. "Characteristics of farm reorganization bankruptcy filings," Agribusiness, John Wiley & Sons, Ltd., vol. 4(1), pages 79-89.
    14. Silber, William L, 1974. "The Market for Federal Agency Securities: Is There an Optimum Size of Issue?," The Review of Economics and Statistics, MIT Press, vol. 56(1), pages 14-22, February.
    15. Gunter, Lewell F. & Smathers, Webb M., Jr. & Ingram, Michael C. & Dubman, Robert W., 1985. "Analysis Of Economic Emergency Loan Allocations And Credit Market Expansion," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 17(2), pages 1-12, December.
    16. Penner, Rudolph G & Silber, William L, 1973. "The Interaction Between Federal Credit Programs and the Impact on the Allocation of Credit," American Economic Review, American Economic Association, vol. 63(5), pages 838-852, December.
    17. Lombra, Raymond E. & Wasylenko, Michael & Wasylenko, Michael, 1984. "The subsidization of small business through federal credit programs: Analytical foundations," Journal of Economics and Business, Elsevier, vol. 36(2), pages 263-274, May.
    18. Herbert L. Baer, 1988. "Regulatory burden handicaps low-risk banking," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Jan.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kerry D. Vandell, 1997. "Improving secondary markets in rural America," Proceedings – Rural and Agricultural Conferences, Federal Reserve Bank of Kansas City, issue Apr, pages 85-120.
    2. Ambrose, Brent W. & Buttimer, Richard Jr., 2005. "GSE impact on rural mortgage markets," Regional Science and Urban Economics, Elsevier, vol. 35(4), pages 417-443, July.
    3. Anginer, Deniz & de la Torre, Augusto & Ize, Alain, 2011. "Risk absorption by the state: when is it good public policy ?," Policy Research Working Paper Series 5893, The World Bank.
    4. Anginer, Deniz & de la Torre, Augusto & Ize, Alain, 2014. "Risk-bearing by the state: When is it good public policy?," Journal of Financial Stability, Elsevier, vol. 10(C), pages 76-86.
    5. Soedarmono, Wahyoe & Machrouh, Fouad & Tarazi, Amine, 2013. "Bank competition, crisis and risk taking: Evidence from emerging markets in Asia," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 23(C), pages 196-221.
    6. George W. Kutner & James A. Seifert, 1989. "The Valuation of Mortgage Loan Commitments Using Option Pricing Estimates," Journal of Real Estate Research, American Real Estate Society, vol. 4(2), pages 13-20.
    7. Allen N. Berger & Gregory F. Udell, 1994. "Lines of credit and relationship lending in small firm finance," Proceedings 52, Federal Reserve Bank of Chicago.
    8. Liu, Benjamin & Skully, Michael, 2005. "The determinants of mortgage yield spread differentials: Securitization," Journal of Multinational Financial Management, Elsevier, vol. 15(4-5), pages 314-333, October.
    9. Donald Hester, 1992. "Financial institutions and the collapse of real estate markets," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 36, pages 114-150.
    10. Michael Manove & A. Jorge Padilla & Marco Pagano, 1998. "Collateral vs. Project Screening: A Model of Lazy Banks," CSEF Working Papers 10, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    11. Hans Gersbach & Volker Hahn, 2009. "Banking-on-the-Average Rules," CER-ETH Economics working paper series 09/107, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    12. C. Sirmans & Stanley Smith & G. Sirmans, 2015. "Determinants of Mortgage Interest Rates: Treasuries versus Swaps," The Journal of Real Estate Finance and Economics, Springer, vol. 50(1), pages 34-51, January.
    13. Krissoff, Barry & Morey, Art, 1986. "The Dollar Turnaround And U.S. Agricultural Exports," Staff Reports 277923, United States Department of Agriculture, Economic Research Service.
    14. Christiansen, Robert E., 1987. "The Impact Of Economic Development On Agricultural Trade Patterns," Staff Reports 277918, United States Department of Agriculture, Economic Research Service.
    15. Gregory E. Elliehausen, 1998. "The cost of banking regulation: a review of the evidence," Staff Studies 171, Board of Governors of the Federal Reserve System (U.S.).
    16. Terence Tai Leung Chong & Wenqi Liu, 2017. "The roadmap of interest rate liberalisation in China," Economic and Political Studies, Taylor & Francis Journals, vol. 5(4), pages 421-440, October.
    17. Allen Huang & Benjamin Liu, 2009. "The Goods and Services Tax (GST) and Bank Mortgage Costs: Empirical Evidence," Discussion Papers in Finance finance:200914, Griffith University, Department of Accounting, Finance and Economics.
    18. Ajit Singh, 1998. "Financial liberalisation, stockmarkets and economic development," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 8(1), pages 165-182.
    19. Hendershott, Patric H. & Van Order, Robert, 1989. "Integration of mortgage and capital markets and the accumulation of residential capital," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 189-210, May.
    20. Shakil Faruqi, 2007. "Pakistan Financial System - The Post-Reform Era Maintaining Stability and Growth," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 12(Special E), pages 68-96, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:uerser:308066. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/ersgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.