Empirical evidence from more than 21,000 non-agency securitized fixed rate mortgages ... suggest that regulations banning refinancing penalties might have the unintended consequence of restricting access to credit and raising rates for the least creditworthy borrowers.
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Wednesday, December 15, 2010
Banning Prepayment Penalties Will Raise Rates, Restrict Credit For Riskier Borrowers
Posted By Milton Recht
From "The Inefficiency of Refinancing: Why Prepayment Penalties are Good for Risky Borrowers" by Christopher J. Mayer, Columbia Business School, Tomasz Piskorski, Columbia Business School and Alexei Tchistyi, Haas School of Business, UC Berkeley, December 2010:
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