Illinois
	Real Estate
	Letter

Summer 1997- Volume 11, Number 3

• "REITs: A Look at Institutional Interest" describes how institutional investors have changed their focus from direct real estate investment to the holding of shares in Real Estate Investment Trusts. Among the reasons cited are REITs' recent growth, which has provided greater choice and liquidity for investors; the benefits of professional management; and REITs' ability to diversify across property types and geographic regions.
• "Mortgage Points: Separating Borrowers According to Mobility", a prominent economist offers a theory to explain why the mortgage market allows a borrower to trade off points against the loan's contract interest rate. The analysis shows that lenders and borrowers both benefit when mobile borrowers can elect to pay fewer points and a higher rate.
• "Points as the Price of the Prepayment Option" provides an alternative view of points; the authors build an option-based model, arguing that points represent the price paid by the borrower for the right to retire the loan's principal balance prior to the stated maturity date.
• "Protecting the Safety of Home Invaders" discusses the often-uncertain laws that apply to actions taken in defense of one's home. The uncertainty could be reduced through financial incentives for residents to avoid using excessive force against intruders.
  
  

© 1997 ORER

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