Litigation against the largest subprime mortgage servicer in the US provides lessons about the appropriate regulation of mortgage servicing and adds to research about the causes of the financial crisis. Mortgage servicing is essential to the functioning of the financial system so servicers must...

We derive and test empirically a robust one-factor asset pricing model consistent with the multiple-priors approach of the ambiguity literature. The robust CAPM can explain the cross-section of expected U.S. stock returns without the need for additional risk factors. Further, observed anomalies...