Part II of the introduction to mortgage-backed securities
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Mortgage-backed securities II
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Part II of the introduction to mortgage-backed securities
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When the bank Sells their mortgages to investment banks dont they charge a lil interest that way there not just making their not just making their money back
I just want to clarify, the investment bank creates new corporation/ entity? what are example of this newly created corporations?
@tcg4111 The 2 billion dollars are cashflows over 10 years.Hence they are not comparable to 100 M made now.To understand this further go to the concept of time value of money.
@tcg4111 it’s just a matter of the investment banks pushing the risk off their own plates. once IB’s sell all the “corporation” shares, it doesn’t matter as much to the IB if people default on their mortgage payments and the corporation’s cash flow dries up
who are some of these “special purpose entities” you speak of?
The math and the model looks fun to play around with until someone defaults.
Then, a few more defaults and then there’s a domino effect and everyone has a sad face now.
just got one question and hopefully you can answer it soon enough for it to help…
why does the INVESTMENT BANK (green bank) make up a corporation which sells shares letting investors bank off the interest and principle payment as well? and therefore making only 100 M (in this case), when, if they kept the rights to the mortage payments to themselves, theyd eventually be making 2 billion dollars (in this case)? provided the investmEnt bank had enough money to buy the rights from the LOCAL BANK
just got one question and hopefully you can answer it soon enough for it to help…
why does the INVESTMENT BANK (green bank) make up a corporation which sells shares letting investors bank off the interest and principle payment as well? and therefore making only 100 M (in this case), when, if they kept the rights to the mortage payments to themselves, theyd eventually be making 2 billion dollars (in this case)? provided the investmEnt bank had enough money to buy the rights from the LOCAL BANK
just got one question and hopefully you can answer it soon enough for it to help…
why does the INVESTMENT BANK (green bank) make up a corporation which sells shares letting investors bank off the interest and principle payment as well? and therefore making only 100 M (in this case), when, if they kept the rights to the mortage payments to themselves, theyd eventually be making 2 billion dollars (in this case)? provided the investmEnt bank had enough money to buy the rights from the LOCAL BANK
Hats off to Creater of that movies…..awesome Explanation with simple examples…….:) Thanks a lot
eASY & High Income Job from the “NET”
forex-secrets@hotmail.com
very clear,
great stuff :]
Weren’t securitized mortgages traded on the open market? If so, it seems strange to me that they would be since isn’t there an upper limit to how much they should be able to go up? In this example, even if all the people actually pay their mortgages, they only have to pay 7% interest. Therefore, there’s an upper limit on the income stream. I’m wondering if these things ever traded above their potential worth (and if so – why)
where does the FNMA, GNMA, FHLMC comes into play?
nice and clear.thanks.
It is important to own a home rather than renting. It is a long term investment compare if you prefer to rent. It’s a waste of money.
Thanks, Wikipedia made no sense to me about this, as usual.
The reason why Sal is so successful at teaching because he knows his topics.
I believe the education system in the US/Canada is failing mainly because so many teachers fail to know their own topic. The focus is largely on teaching methods which in my opinion is useless without a proper understanding of the topic. I have seen easily hundreds (former teaching assistant) of students go into teaching and are CLUELESS to what they teach. They are motivated and great people but they are CLUELESS.
@honest 4truth
i fink the investment banks set up the special purpose vehicles/entities (spv/spe) so they cud get the loans off their balance sheets.
in this video he says investment banks may have done this because they are not in the business of dealing with mortgage loans however i rekon that they knew a number of these loans were very very risky and so transferred this risk onto shareholders, mutual funds, hedge funds and pension funds etc.
thank you very much
Get easy home finance from Integrated Financial Group,Inc, your mortgage bankers.
thank you very much
If you’re entitled to 110$ a year in the mentioned case, why would you pay 110$ for that right? This makes no sense