Servicers and Mortgage-Backed Securities Default: Theory and Evidence

38 Pages Posted: 25 Mar 2011

See all articles by Brent W. Ambrose

Brent W. Ambrose

Pennsylvania State University

Anthony B. Sanders

George Mason University - School of Business

Abdullah Yavas

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics

Multiple version iconThere are 3 versions of this paper

Date Written: December 10, 2010

Abstract

We study conflicting incentives of the master and special servicers in handling troubled loans in a CMBS 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.

Keywords: Special Severicer, CMBS, Default, Asymmetric Information

JEL Classification: G21, G14,

Suggested Citation

Ambrose, Brent W. and Sanders, Anthony Bown and Yavas, Abdullah, Servicers and Mortgage-Backed Securities Default: Theory and Evidence (December 10, 2010). Available at SSRN: https://ssrn.com/abstract=1789695 or http://dx.doi.org/10.2139/ssrn.1789695

Brent W. Ambrose (Contact Author)

Pennsylvania State University ( email )

University Park, PA 16802-3306
United States
814-867-0066 (Phone)
814-865-6284 (Fax)

Anthony Bown Sanders

George Mason University - School of Business ( email )

Fairfax, VA 22030
United States

Abdullah Yavas

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States

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