Introduction to Mortgages and Mortgage Backed Securities

1st Edition

Authors: Richard Green
Hardcover ISBN: 9780124017436
eBook ISBN: 9780124045934
Imprint: Academic Press
Published Date: 1st November 2013
Page Count: 256
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In Introduction to Mortgages & Mortgage Backed Securities, author Richard Green combines current practices in real estate capital markets with financial theory so readers can make intelligent business decisions. After a behavioral economics chapter on the nature of real estate decisions, he explores mortgage products, processes, derivatives, and international practices. By focusing on debt, his book presents a different view of the mortgage market than is commonly available, and his primer on fixed-income tools and concepts ensures that readers understand the rich content he covers. Including commercial and residential real estate, this book explains how the markets work, why they collapsed in 2008, and what countries are doing to protect themselves from future bubbles. Green's expertise illuminates both the fundamentals of mortgage analysis and the international paradigms of products, models, and regulatory environments.

Key Features

  • Written for buyers of real estate, not mortgage lenders
  • Balances theory with increasingly complex practices of commercial and residential mortgage lending
  • Emphasizes international practices, changes caused by the 2008-11 financial crisis, and the behavioral aspects of mortgage decision making


Upper-division undergraduates and graduate students studying real estate finance and capital markets.  Common course titles include "Mortgages and Mortgage-Backed Securities and Markets," "Real Estate Analysis," and "Investment Property Analysis." 

Table of Contents

Contributors and Acknowledgments

Chapter 1. A Brief History of Mortgages


The Great Depression, the New Deal, and the Transformation of the American Mortgage Market

The Post World War II Era


Chapter 2. Mortgage Originations and the Mortgage Chain


Loan Origination


The Securitization Process



A Summary: The Mortgage Chain


Chapter 3. The Work-Horse American Mortgage: The 30-Year Fixed-Rate Mortgage


The Popularity of the 30-Year Fixed-Rate Mortgage


Chapter 4. Other Types of Mortgages


Interest-Only Mortgages

Pay Option ARMS, PLAMS, and Other Negative Amortization Mortgages

Exotic Mortgages

Second Lien Mortgages


Chapter 5. Underwriting Mortgages and Mortgage Default



Underwriting Criteria

Automated Valuation Methods

Putting it Together


Chapter 6. Mortgage-Backed Securities and Derivatives


Types of Tranches

Chapter 7. Multifamily Mortgages


Property-Based Underwriting Standards

Underwriting the Borrower

Commercial Loan Covenants

Sources of Multifamily Finance

The 5–50 Problem

Section 42 Low Income Housing Tax Credit Program

Modeling the Cost of Default for a Multifamily Property


Chapter 8. International Comparisons of Mortgages


Tax Treatment of Mortgages

Sources of Funding

Differences in Government Intervention in Mortgages

How Consumer-Friendly Is the US Mortgage?

Size of Mortgage Markets

Mortgages and Macro-Prudential Supervision


Chapter 9. The Subp


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© Academic Press 2014
Academic Press
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About the Author

Richard Green

Richard Green is Director of the Lusk Center for Real Estate at the University of Southern California. Prior to joining the USC faculty, he was Oliver T. Carr Jr. Chair of Real Estate Finance at The George Washington University School of Business. He was previously Wangard Faculty Scholar and Chair of Real Estate and Urban Land Economics at the University of Wisconsin, Madison.

Affiliations and Expertise

Director of the Lusk Center for Real Estate, University of Southern California, Los Angeles, USA


"After reviewing the history of mortgages in the United States, this finance textbook explains the loan origination and securitization process, mortgage underwriting criteria, automated valuation methods, the splitting of mortgage pools, and commercial loan covenants.", April 2014
"Richard Green has done a masterful job of addressing the key elements of the mortgage market.  The book will be an ideal text for advanced undergraduate or graduate students studying real estate finance.   The book should be suitable for students from a variety of disciplines including business administration, economics, and urban planning."--Michael Lacour-Little, California State University – Fullerton
"Many books have been written recently about mortgages and the financial crisis.  This is the only book I've seen that takes the reader through a wide range of mortgage products from origination through securitization so clearly and concisely; then connects these designs and the policy decisions that accompanied them to the recent crisis.  The accompanying Excel models are a great help to readers who like to see how financial products work in practice with actual numbers.  A terrific choice for any university housing or finance course, and for anyone in the business who needs to really understand how these products work."--Stephen Malpezzi, University of Wisconsin