Collateral Valuation and Borrower Financial Constraints: Evidence from the Residential Real Estate Market
| Autor: | Vincent W. Yao, Sumit Agarwal, Itzhak Ben-David |
|---|---|
| Rok vydání: | 2015 |
| Předmět: |
Leverage (finance)
Collateral Strategy and Management media_common.quotation_subject jel:R2 jel:R3 Management Science and Operations Research jel:G01 jel:G23 jel:G02 jel:K20 jel:L85 jel:G21 jel:D03 Residential real estate jel:R21 Order (exchange) jel:G2 media_common Valuation (finance) Finance business.industry TheoryofComputation_GENERAL jel:G30 jel:D12 jel:D10 jel:D14 Interest rate jel:G17 Incentive jel:D18 jel:R31 jel:D1 jel:R51 Business Appraisal process |
| Zdroj: | Management Science. 61:2220-2240 |
| ISSN: | 1526-5501 0025-1909 |
| DOI: | 10.1287/mnsc.2014.2002 |
| Popis: | Financially constrained borrowers have the incentive to influence the appraisal process in order to increase borrowing or reduce the interest rate. We document that the average valuation bias for residential refinance transactions is above 5%. The bias is larger for highly leveraged transactions, around critical leverage thresholds, and for transactions mediated through a broker. Mortgages with inflated valuations default more often. Lenders account for 60%–90% of the bias through pricing. This paper was accepted by Wei Jiang, finance. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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