Premium
Servicers and Mortgage‐Backed Securities Default: Theory and Evidence
Author(s) -
Ambrose Brent W.,
Sanders Anthony B.,
Yavas Abdullah
Publication year - 2015
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.12099
Subject(s) - default , foreclosure , shared appreciation mortgage , loan , incentive , economics , commercial mortgage backed security , finance , business , mortgage insurance , financial system , microeconomics , insurance policy , casualty insurance
We study conflicting incentives of the master and special servicers in handling troubled loans in a Commercial Mortgage‐Backed Securities deal and how the frictions between the interests of the two servicers might be diminished if the master and special servicing rights are held by the same firm. We show that concentrating both servicing rights in one firm reduces the likelihood that a defaulted loan terminates in foreclosure.