This report for managers of pension funds discusses the advantages and techniques of pension fund investment in housing. Based on a conference addressing pension fund investment, this report describes the state of the mortgage secondary market, the innovations in instruments, and the assessment by respected investment advisors of mortgage investments in four main areas: cash flow, yield, risk, and liquidity. A brief discussion of direct investment in mortgages, a pattern heavily favored by multiemployer funds, is included. The report offers summaries of conferences and work sessions on the growth and changes in the mortgage market in the form of a workbook that chronicles the participants' efforts, comments, and activities. The workbook is designed as a reference source to the array of mortgage instruments available today. It provides a summary of many of the mortgage types used today, together with the most common ways in which they are packaged. There are also general discussions of other aspects of mortgage investments such as yield and liquidity. The report provides updates on ERISA and the prudence rule, answering some typical questions about the law and regulations which were derived from the conference. The report also discusses call protection strategies, suggested solutions to the problem of standardization, the projected impact of a successful provision of call protection to mortgage - backed securities, and the status of regulatory and legal action. Appendixes include a summary of the three conferences on pension fund investments held in 1982 and a draft revenue ruling request. A discussion of actions easing ERISA restrictions is included. Graphs, charts, and data tables are supplied.
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