TY - JOUR
T1 - Embedded Options in the Mortgage Contract
AU - Ambrose, Brent W.
AU - Buttimer, Richard J.
N1 - Funding Information:
We thank Charles Capone, Jim Kau, Steve Ott, and the seminar participants at the Federal Reserve Board, Harvard University, and the University of British Columbia for their helpful comments and suggestions. An earlier version of this article was presented at the 1998 AREUEA meeting. Brent Ambrose acknowledges the support received by the Samuel Zell and Robert Lurie Real Estate Center Research Sponsors Program at the University of Pennsylvania.
PY - 2000
Y1 - 2000
N2 - Loss mitigation is the process by which lenders attempt to minimize losses associated with foreclosure. As competition increases in the mortgage industry, lenders and servicers are under great pressure to adopt loss mitigation tactics rather than simply use foreclosure as the means of dealing with borrowers in default. This study presents a mortgage-pricing model that fully specifies all borrower options with respect to default, including the ability to reinstate the mortgage out of default. We document the impact of various loss mitigation programs, including forbearance and antideficiency judgments, as well as the value of credit on borrower default behavior.
AB - Loss mitigation is the process by which lenders attempt to minimize losses associated with foreclosure. As competition increases in the mortgage industry, lenders and servicers are under great pressure to adopt loss mitigation tactics rather than simply use foreclosure as the means of dealing with borrowers in default. This study presents a mortgage-pricing model that fully specifies all borrower options with respect to default, including the ability to reinstate the mortgage out of default. We document the impact of various loss mitigation programs, including forbearance and antideficiency judgments, as well as the value of credit on borrower default behavior.
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U2 - 10.1023/A:1007819408669
DO - 10.1023/A:1007819408669
M3 - Article
AN - SCOPUS:0034364368
SN - 0895-5638
VL - 21
SP - 95
EP - 111
JO - Journal of Real Estate Finance and Economics
JF - Journal of Real Estate Finance and Economics
IS - 2
ER -