Most empirical models of mortgage terminations emphasize refinancing incentives related to interest rate movements. We consider three sources of risk that lead to observed mortgage payment terminations: interest-rate related refinancing, default, and moving. We estimate models that identify the...

Empirical mortgage prepayment models generally have trouble explaining differences in mortgage prepayment speeds among pools with similar interest rates on the underlying mortgages. In this paper, we model some of the sources of termination heterogeneity across mortgage pools, particularly the...