Beruflich Dokumente
Kultur Dokumente
Mortgage Markets
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Mortgage Characteristics Lien Down payment Private mortgage insurance Federally insured mortgages Conventional mortgages Amortized Balloon payment mortgages
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FIs remove mortgages from their balance sheet through one of two mechanisms
pool recently originated mortgages together and sell them in the secondary market issue mortgage-backed securities that are backed by their newly originated mortgages
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Mortgage Sales
Mortgage sale Allow FIs to manage credit risk and achieve better asset diversification, improves their liquidity risk FIs are encouraged to sell loans for economic and regulatory reasons Major buyers of mortgage loans Major sellers of mortgage loans are money center banks, smaller banks, foreign banks, investment banks
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Securitization of Mortgages Pass-through mortgage securities Issued in standard denominations, usually $25,000 with increments of $5,000 beyond the minimum Three government owned or sponsored agencies involved - Ginnie Mae (GNMA), Fannie Mae (FNMA, and Freddie Mac (FHLMC)
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Created by packaging and securitizing whole mortgage loans or resecuritizing pass-through securities Attractive to secondary mortgage market investors because they can choose a particular CMO class that fits their maturity needs
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