Servicers and Mortgage‐Backed Securities Default: Theory and Evidence

28 Pages Posted: 11 Apr 2016

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

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Date Written: Summer 2016

Abstract

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.

Suggested Citation

Ambrose, Brent W. and Sanders, Anthony Bown and Yavas, Abdullah, Servicers and Mortgage‐Backed Securities Default: Theory and Evidence (Summer 2016). Real Estate Economics, Vol. 44, Issue 2, pp. 462-489, 2016. Available at SSRN: https://ssrn.com/abstract=2761972 or http://dx.doi.org/10.1111/1540-6229.12099

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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