Cost, Value, and Hybrid-Based Underwriting Criteria

M. Atef Sharkawy () and Walter C. Barnes
Additional contact information
M. Atef Sharkawy: Department of Landscpae Architecture and Urban Planning College of Architecture Texas A&M University College Station, Texas 77843-3137, http://taz.tamu.edu/LAUP/
Walter C. Barnes: The Travelers Realty Investment Company One Tower Square Hartford, Connecticut 06183-2020

Journal of Real Estate Research, 1992, vol. 7, issue 2, 169-186

Abstract: This 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.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 1992
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