COURSE NUMBER: BA283.1

COURSE TITLE: Real Estate Financing

UNITS OF CREDIT: 3

INSTRUCTOR: Nancy E. Wallace

E-MAIL ADDRESS: Wallace@haas.berkeley.edu

CLASS WEB PAGE LOCATION (HTTP URL):

MEETING DAY(S)/TIME: Tuesday, 6:00-9:30 PM

PREREQUISITE(S): BA280, BA203

CLASS FORMAT: Lectures and cases.

REQUIRED READINGS:

Reader, Textbook

BASIS FOR FINAL GRADE:

Midterm, homework sets, Final, class project.

ABSTRACT OF COURSE'S CONTENT AND OBJECTIVES:

This course considers the operation of the U.S. mortgage and structured finance markets. The course applies basic tools of finance to the evaluation of mortgage, lease, and asset-backed contracts, the pricing of these contracts, and strategies to securitize both debt and real estate equity. The course exposes students to cases about current "real-world" real estate debt and equity deals and provides hands-on experience using modern option pricing tools for evaluating mortgage debt and equity-based securities.

Basic principles of economics and finance will be used to motivate the analysis tools surveyed in this course. The course begins with an overview of the structure of mortgage contracts and reviews the financial mathematics of mortgages including the calculation of various types of duration and convexity. These principles will be applied in the first major topic of the course: risk sharing in mortgage finance and leasing. In the second, part of the course we will consider mortgage and lease pricing including methods to price the options embedded in these contracts. The final section of the course will consider mortgage and asset-backed securitization, bond structures, and pricing.

BIOGRAPHICAL SKETCH:

Nancy Wallace is an Associate Professor of Real Estate in the Haas School of Business at the University of California, Berkeley. She teaches asset-backed securitization, real estate investment analysis, and real estate finance at Haas. Her primary research focus is housing price indices, models to monitor residential real estate price movements over the business cycle, mortgage prepayment and pricing models, the market microstructure of mortgage backed security trading, and mortgage contract design. She is currently working on a research project to extend option pricing models to price real estate leases for use in pricing commercial mortgage backed securities. She serves as a visiting scholar at the San Francisco Federal Reserve Bank where she is working on mortgage prepayment models. She is on the board of directors of the American Real Estate and Urban Economics Association, she is a managing editor of Real Estate Finance, and she is a member of the editorial boards of the Journal of Computational Finance and Real Estate Economics.