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Modeling the Budgetary Costs of FHA's Single Family Mortgage Insurance: Working Paper 2014-05

Author

Listed:
  • Francesca Castelli
  • Damien Moore
  • Gabriel Ehrlich
  • Jeffrey Perry

Abstract

This paper presents the simulation model that the Congressional Budget Office (CBO) uses to project the budgetary costs of the Federal Housing Administration's (FHA's) single-family mortgage insurance program. CBO simulates defaults, recoveries, and prepayments on cohorts of mortgages insured by FHA with key parameters estimated from a dataset of FHA-insured mortgages. Those simulations are used to estimate the loan guarantees' subsidy rates, which are the lifetime cost of FHA's insurance claim payments minus fees, expressed as a percentage of the

Suggested Citation

  • Francesca Castelli & Damien Moore & Gabriel Ehrlich & Jeffrey Perry, 2014. "Modeling the Budgetary Costs of FHA's Single Family Mortgage Insurance: Working Paper 2014-05," Working Papers 45711, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:45711
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    File URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/45711-FHA_1.pdf
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    References listed on IDEAS

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    3. Qi, Min & Zhao, Xinlei, 2011. "Comparison of modeling methods for Loss Given Default," Journal of Banking & Finance, Elsevier, vol. 35(11), pages 2842-2855, November.
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    5. Ambrose, Brent W & Capone, Charles A, Jr & Deng, Yongheng, 2001. "Optimal Put Exercise: An Empirical Examination of Conditions for Mortgage Foreclosure," The Journal of Real Estate Finance and Economics, Springer, vol. 23(2), pages 213-234, September.
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    Cited by:

    1. Gabriel Ehrlich & Jeffrey Perry, 2015. "Do Large-Scale Refinancing Programs Reduce Mortgage Defaults? Evidence From a Regression Discontinuity Design: Working Paper 2015-06," Working Papers 50871, Congressional Budget Office.
    2. Park, Kevin A., 2016. "FHA loan performance and adverse selection in mortgage insurance," Journal of Housing Economics, Elsevier, vol. 34(C), pages 82-97.

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    More about this item

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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