Comm 405: The US Housing Cycle of the 2000s
Tom Davidoff
November 8, 2016
Learning Objectives
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Complete analysis of default risk
Facts and Puzzles Surrounding US Mortgage and Housing
Market
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Relationship to objects we have studied
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Ho
HOUSING
M A R K E T
INFOR M AT ION
HOUSING MARKET
ASSESSMENT
Canada
Date Released: Fourth Quarter 2016
Housing market intelligence you can count on
Housing Market Assessment  Canada  Date Released  Fourth Quarter 2016
Highlights
This
quarterly release
BAUL 501 Lecture 5: Prepayment
and Not Plain Vanilla Mortgages
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Review Constant payment FRM problems
Exotic mortgages
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Interest accruing
Lines of credit
Variable rate (ARM)
Graduated payment and interestonly
Interest Accruing Loans (Negative Am
Lecture 3: Mortgage Law
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Problem set review
Mortgage Law
A couple of cases
COMM405: Real Estate Finance
Lecture 3: Mortgage Law
A bit of math review related to ground lease
h
r im
= e rm
1+
m
m
Z
ke rt
ke rt dt =

r 0
t=0
1
k
=k
0 =
r
r
lim
COMM4
Pro Forma 1
Thomas Davidoff
November 13, 2016
Our objectives today
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NOI
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Cash flow
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Discount rate
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cap rate (ROI)
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NPV
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IRR
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cash on cash (ROE)
Net Operating Income
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Gross potential rental income
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Minus vacancy (potential  vacancy = EGI)
Minus o
Lecture 4: Mortgage Math
1. Mortgage Law Problem Set Review
2. Amortization Table
3. Using PV calculations to extract information
COMM405: Real Estate Finance
Lecture 4: Mortgage Math
Plain vanilla fixed rate mortgage
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Constant Payment
Fully amortizi
Default and prepayment options
Thomas Davidoff
October 2, 2016
Valuing assets, including options
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t denotes time
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denotes states of the world (stochastic path)
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xt is cashflow (possibly negative) at t,
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pt, is probability t, occurs
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vt, is value of
Fall 2015: COMM 405 Real Estate Finance, Midterm Exam, Thomas Davidoff
ANSWER ALL QUESTIONS IN EXAM BOOKLET, WRITE NAME AND
STUDENT ID ON COVER
Multiple choice: 5 points each
1. Legally, a mortgage is:
(a) A specified interest rate and amortization period
COMM390 InClass Assignment #1
KA CHUN, NG (13130133)
To: All Employees
From: Ka Chun, Ng (CEO)
Subject: Urgent Message from CEO of North Shore Spokes
Date: Friday, January 15, 2016
To all My Valued Employees,
It has come to our attention that due to the
Comm 371 Assignment 1
1a) By Using Annuity Formula and Transforming the APR to EAR,
Annuity Formula: PV =
APR=
3.5
12
C
r
(1
1
)
( 1+r )t
= 0.291666% = r12
(1+r12) 12 = (1+r1) 1 = 3.5567% = EAR
60000
0.035567
(1
1
25 ) (1+0.035567) = $1017790.2307 at Ye
Calculating VaR using historical returns data
We calculate VaR using two methods. First, one needs a large sample
of historical returns for the investment, with the returns at the appropriate horizon. In our examples, we
are calculatng the 1month VaR at t
Sauder School Comm 204 class 4
Logistics and Operations Management
COMM 204 Logistics and
Operations Management
Process Analysis (I)
Review
Process mapping basics
Key steps in process analysis
Get feedback and validate maps
Process analysis basics (3
Makeup/Catchup
COMM 405
Tom Davidoff
September 30, 2016
ARM Problem SET question
Standard FRM months 112
Month 13.24
New INT
AMORT = PMTINT
BAL_cfw_t+1 = BAL_cfw_tAMORT
Make Good Use of PV Formula: Good ExaM Question
V=(x/r)(1(1+r)^(T)
Solve for T if
COMM 405: Real Estate Finance
Fall 2015
Part 1
Lecture 1: Course Introduction and
Background
Thomas Davidoff
September 4, 2016
COMM405: Real Estate Finance
Warmup discussion
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Split up into mixed groups of 4
Discuss: There are no bad assets, only bad
as
DISCLAIMER: This publication is intended for EDUCATIONAL purposes only. The information contained
herein is subject to change with no notice, and while a great deal of care has been taken to provide accurate
and current information, UBC, their affiliates,
Can High Costs Justify Weak Demand for the Home Equity
Conversion Mortgage?
Thomas Davido
Sauder School of Business, University of British Columbia.
February 20, 2015
I thank Xudong An, Adlai Fisher, Ron Giammarino, Geng Li, Alvaro Parra, Caroline Puger,
Can High Costs Justify Weak Demand for the
Home Equity Conversion Mortgage?
Thomas Davido
Sauder School of Business, UBC
December 17, 2014
Overview
HECM lets retirees spend home equity without moving
HECM is unpopular ( 3% market share)
# 1 explanation: h
Lecture 4: Mortgage Math
1. Mortgage Law Problem Set Review
2. Amortization Table
3. Using PV calculations to extract information
COMM405: Real Estate Finance
Lecture 4: Mortgage Math
Plain vanilla xed rate mortgage
Constant Payment
Fully amortizing over
Lecture 3: Mortgage Law
Problem set review
Mortgage Law
A couple of cases
COMM405: Real Estate Finance
Lecture 3: Mortgage Law
A bit of math review related to ground lease
lim
m
1+
r
m
m
= e rm
ke rt dt =
t=0
=k
COMM405: Real Estate Finance
ke rt

r 0
COMM 405: Real Estate Finance
Fall 2015
Part 1
Lecture 2: Property Law
Thomas Davido
September 12, 2015
COMM405: Real Estate Finance
Lecture 2: Property Law
Agenda
Problem set review
Property Law
Estate and nonestate land interests
Ownership and CoOwner
Prepayment options
Review problems on exotic mortgages
Comparison of 5year CA FRM vs US ARM
Types of prepayment
mobilitydriven
ratedriven
Valuing prepayment in a simple setting
Prepayment mitigation
Defeasance
IRD
3 months interest
Bigger spread
Points