Rose, Morgan J. - Economics Department, University of Maryland-Baltimore … - 2010
-originated subprime mortgages, but only for loans with prepayment penalties. Evidence also indicates that non-banks price prepayment … penalties less favorably to borrowers than banks do, and non-banks originate disproportionately more loans with prepayment … use of prepayment penalties eliminate the elevated default risk of non-bank originations relative to bank originations …