Abstract

http://ssrn.com/abstract=158629
 
 

Citations



 


 



Third Party Originators and Mortgage Prepayment Risk: An Agency Problem?


Michael LaCour-Little


California State University at Fullerton

Gregory H. Chun


Kimpo College


Journal of Real Estate Research, Vol. 17, No. 1/2

Abstract:     
We focus on an agency problem encountered by mortgage lenders and investors in mortgage-backed securities when the underlying collateral is originated by third parties. Third parties, such as mortgage brokers, have economic incentives to encourage borrowers to refinance and, accordingly, their actions may affect asset values. We sketch the principal-agent problem and examine two sets of data. Results support the argument: loans originated by third parties are significantly more likely to prepay after controlling for other known determinants of termination risk. Moreover, third party loans are about three times as sensitive to refinancing incentives, compared to retail loans.

JEL Classification: G21, R39

Accepted Paper Series





Not Available For Download

Date posted: April 16, 1999  

Suggested Citation

LaCour-Little, Michael and Chun, Gregory H., Third Party Originators and Mortgage Prepayment Risk: An Agency Problem?. Journal of Real Estate Research, Vol. 17, No. 1/2. Available at SSRN: http://ssrn.com/abstract=158629

Contact Information

Michael LaCour-Little (Contact Author)
California State University at Fullerton ( email )
5133 Mihaylo Hall
Fullerton, CA 92834-6848
United States
657-278-4014 (Phone)
657-278-2161 (Fax)
Gregory H. Chun
Kimpo College ( email )
Korea
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