Servicers and Mortgage-Backed Securities Default: Theory and Evidence
38 Pages Posted: 25 Mar 2011
Date Written: December 10, 2010
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: Suggested Citation