Earthquake risk shakes mortgage industry

Article Abstract:

The earthquake that shook Northridge, CA, on January 17, 1994 caused major problems in the mortgage industry. Homeowner insurance policy does not cover earthquake damages so even with government assistance, people could not afford to rebuild their homes and pay mortgages. The mortgage industry is left to handle property costs, and damage costs since the insurance industry has no obligation to pay. Mortgage industry loses grew high, so mortgage finance institutions sought ways to avoid such problem in the future. Steps are taken to kindle cooperation with the insurance and government sectors.

Research and Development in the Physical, Engineering, and Life Sciences, Earthquake R&D, Economic aspects, Commercial finance companies, Mortgage banks, Earthquakes, Natural disasters, Seismological research, Northridge, California

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Mortgage accounting: what's the score?

Article Abstract:

The book value approach used in mortgage securities trading is changed by the Financial Accounting Standards Board (FASB) into market-value accounting. Companies are required to report on a 'mark-to-market' basis the current values of their securities. FASB's Statement of Financial Accounting Standards (SFAS) monitors securities through three categories: hold, trade and sell, by which SFAS would know at what stage securities are. The rules set by FASB seem to favor mortgage securities but instability exists with the unequal treatment of equity and debt securities.

Standards, Laws, regulations and rules, Accounting, Financial Accounting Standards Board

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Discrimination study of Boston Federal Reserve on mortgage discrimination

Article Abstract:

A study by the Federal Reserve Bank of Boston on mortgage discrimination has revealed that loan applications from whites have a 60% probability of approval over those of African-Americans and Hispanics. The research controlled the factors influencing lender credit decision to make a probability forecast based on the borrower's credit and loancharacteristics only. Although the study suffers from several weaknesses, it throws open questions on the credit decision to the industry.

Federal reserve banks, Research, Banking industry, Analysis, Mortgage discrimination, Federal Reserve Bank of Boston

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