Does Junior Inherit? Refinancing and the Blocking Power of Second Mortgages

• 成果类型: Article
• 署名作者: Bond, Philip; Elul, Ronel; Garyn-Tal, Sharon; Musto, David K.
• 署名单位: University of Washington; University of Washington Seattle; Federal Reserve System - USA; Federal Reserve Bank - Philadelphia; Max Stern Yezreel Valley College; University of Pennsylvania
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhw079
• 发表日期: 2017
• 页码: 211
• 关键词: DEFAULT EVIDENCE; securitization

摘要

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.