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Option-based models of mortgage default posit that the central measure of default risk is the loanto-value (LTV) ratio. We argue, however, that an unrecognized problem with extending the basic option model to existing multifamily and commercial mortgages is that key variables in the option model are endogenous to the loan origination and property sale process. This endogeneity implies, among other things, that no empirical relation may be observed between default and LTV. This is becausedoi:10.2139/ssrn.170088 fatcat:s5zmaje2tba2pc7axw7xyawnjm