Unlocking the Secrets Behind Commercial Mortgage Termination Decisions
The article looks at why people end commercial mortgage contracts early, either by paying them off early or by defaulting. By analyzing loan data, the researchers found that the values of certain options influence these decisions. They discovered that the risks of paying off early or defaulting increase as the value of these options goes up. Factors like cash flow, credit conditions, and bargaining power also play a role in the borrower's decision to end the mortgage contract.