E-viri
PDF
Recenzirano
Odprti dostop
-
Bond, Philip; Elul, Ronel; Garyn-Tal, Sharon; Musto, David K.
Review of financial studies/The Review of financial studies, 01/2017, Letnik: 30, Številka: 1Journal Article
In most U.S. states, mortgage seniority follows time priority: older mortgages are paid first. This potentially impedes refinancing of senior mortgages because replacement mortgages are junior unless the existing junior lienholders consent to resubordination. We exploit legal variation across states to provide evidence that time priority reduces refinancing, especially of smaller mortgages (suggesting a significant fixed cost of obtaining resubordination) and of mortgages close to the conforming loan limit. On the contrary, we find evidence that time priority renders second mortgages more valuable to lenders, increasing the likelihood that a borrower obtains a second mortgage.
