Written By: Karen Deis and contributions by Jack Guttentag, Professor of Finance Emeritus at Wharton School of the University of Pennsylvania (www.mtgprofessor.com)

Unfortunately, we have all had loans cancel for one reason or another. In my experience, the lowest fallout ratios occur on purchase transactions. The highest fallout occurs with refinance transactions.

Jack Guttentag has done a subjective study on the probability of certain refinance transactions canceling, has rated the different kinds of deals and the likelihood it will not close.

He calls it a “regret potential” –that is the likelihood that the borrower will “regret” what they did—is based on a scale from 0 (lowest Regret Potential—or RP) to 100 (highest RP), ranking different types of refinance transactions and their potential of being canceled either during the loan process or the 3-day right of recession period.

Why is this important to you? Because you need to know the odds! You can pay particular attention to the structure of the deals and provide additional information and customer service to those refi deals with the higher RP (Regret Potential) to make sure they close.

Here are the types of refinance deals and Regret Potential ratings:

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