Asymmetric Information, Adverse Selection, & Contract Adjustment in the Commercial Mortgage-Backed Securities (Cmbs) Market.

The commercial mortgage-backed securities (CMBS) market experienced a massive downturn in conjunction with the U.S. financial collapse of 2007 & 2008. This research will examine the presence of asymmetric information, diminishing due diligence on behalf of the originator, and the eventual subordination of quality of CMBS. The principal-agent model will be implemented to examine the originator (agent) and investor (principal) relationship through various contractual incentives, penalties, and triggers within the CMBS market