| This study investigates the creation and early development of the Jamaica Mortgage Bank and its impact on the mortgage market in Jamaica. Established in 1971 as a predominantly secondary mortgage market institution and modeled after the Federal National Mortgage Association in Washington, D.C., USA, the bank was expected to play a major role in the growth and development of the mortgage market in Jamaica, its main objectives being to increase the liquidity of mortgage-lending institutions, attract new investors into the mortgage market, and promote and develop an active mortgage market.;It was hypothesized that the introduction of the Jamaica Mortgage Bank did not significantly affect the number of mortgage contracts and the behavior of mortgage institutions in Jamaica.;Because of the relatively narrow empirical base with which the study was conducted, it became necessary to combine cross-section and time series data in the analysis. This was supplemented by a questionnaire to corporate managers of mortgage institutions regarding their reactions to the bank's policies in instituting changes in mortgage practices in Jamaica.;It was found that the Jamaica Mortgage Bank has been less than successful in its efforts to significantly improve the liquidity of mortgage institutions and to expand the amount of funds to mortgage-originating institutions.;It was also observed that the bank had only limited success in recycling funds in the mortgage market through its sales program. Further, the bank failed to develop a mortgage instrument to attract local savings from individual and institutional investors.;From the results of the questionnaire, there appears to be a general consensus that the bank has been instrumental in instituting changes in mortgage practices in Jamaica, namely in the areas of mortgage credit underwriting, accounting practices and procedures, loan amortization, the marketability and transferability of the mortgage instrument, and low-income housing developments.;This study provides a striking empirical test of the transferability of a modern capital market institution to the developing world. It demonstrates the opportunities and dangers inherent in the choice of a secondary mortgage market institution as an alternative in meeting housing and finance requirements in the developing world. |
