Note, this is a message I received from my lender. I work in asset management but this is a good note on what’s been happening in MBS:
Been in the mortgage industry since 1985. Today will end the craziest week I’ve ever experienced.
Here’s a recap of what’s occurred:
Mortgage investors are so spooked out by cities and businesses shutting and the thought of 20% unemployment that they completely abandoned the mortgage market. Mortgage rates went skyrocketing from an all-time low into the mid 4’s in just a few days.
The Fed said, “don’t worry… we will buy all the mortgages like we did in 2008.” Rates then came crashing back down into the low to mid 3’s….in one incredible day.
Fannie and Freddie announced they would allow borrowers to reduce or defer up to 12 mortgage payments with no credit hit. They obviously don’t want a foreclosure or short sale crisis like 2008. Call your mortgage company for details. Fannie and Freddie acknowledged that appraisers may be freaked out going into stranger’s homes so they made it so they don’t necessarily have to physically inspect the property. They now allow for desktop and drive-by appraisals on some transactions. Mostly owner occupied purchases but some second homes and investment homes too.
The IRS extended the tax deadline to July 15 but then shut down their offices making tax transcripts very challenging to obtain. Lenders must now use alternatives.
Title companies tried to slip in a waiver to give themselves an out for virus issues. Lenders said “uh, no,” but provided other ways to protect the collateral.
Fannie and Freddie told lenders to start being way more cautious. Confirm employment on, or very near, the day of funding, don’t trust dated documents, make 100% sure the borrower has the ability to repay the loan for the next few years and make sure again at closing. Do not fund loans where you have any doubt even if that means denying loans on closing day.
Congress gave Americans $2 trillion in relief to help get us through the coming weeks or months.
The jumbo loan market completely melted down. Those loans will be very hard to get going forward and will take way longer to close. Those loans are not backed by the government. Talk to your lender about alternatives.
The non QM market (bank statement loans and alternative doc loans) completely melted down and those loans have nearly all disappeared going forward. Those loans are not backed by the government. Nearly every down payment assistance program
... keep reading on reddit ➡84% of the recent stimulus dollars went into buying mortgage-backed securities. That can’t be a good sign. I know I’m probably going to get downvoted because no one likes bad news.
The following is for people who are about to downvote me: Real estate’s going to go up forever! Houses will never lose value because people need a place to live! Massive unemployment never affects real estate prices!
edit: Of course Goldman Sachs isn't all to blame. Other bankers who have contributed to Clinton can be blamed too and so can the financial regulators including the federal reserve and institutions such as Fannie and Freddie. That said this post is specifically about Goldman Sachs.
#To those acting like Goldman did nothing wrong and everyone is over reacting: Goldman Sachs was sued by the SEC for fraud. They settled out of court for half a billion dollars. Yes they used common sense to protected themselves WHILE DEFRAUDING MILLIONS OF PEOPLE.
https://www.sec.gov/news/press/2010/2010-59.htm
>The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages
http://www.nytimes.com/2010/07/16/business/16goldman.html?_r=0
>Goldman Sachs has agreed to pay $550 million to settle federal claims that it misled investors in a subprime mortgage product as the housing market began to collapse, officials said Thursday.
They are LIARS who INTENDED to do harm by LYING TO THEIR OWN INVESTORS. These are proven accepted facts, you can google it your self if you don't want to believe me.
#THIS ISN'T MY "INTERPRETATION", THE SEC SUED THEM FOR FRAUD. IT'S NOT UP FOR DEBATE.
^^also ^^the ^^guy ^^who ^^bought ^^himself ^^gold ^^is ^^a ^^moron
http://www.mcclatchydc.com/news/politics-government/article24561376.html
>Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.
Goldman Sachs literally helped tank the economy so they could profit from it
http://www.nytimes.com/2009/12/24/business/24trading.html?pagewanted=all&_r=0
>a Princeton graduate, had risen to prominence inside the bank by creating mortgage-related securities, named Abacus, that were at first intended to protect Goldman from investment losses if the housing market collapsed. As the market soured, Goldman created even more of these securities, enabling it to pocket huge profits.
>Goldman’s own clients who bought them, however, were less fortunate.
>Pension funds and insurance companies lost billions of dollars on securities that they believed were solid investments, according to former Goldman employee
... keep reading on reddit ➡Has Anyone Taken Morris Davis For Real Estate Finance and Mortgage-Backed Securities? Thoughts?
The reviews on rate my professor were very bad. some sad if you put in the work it is possible to get an A. Should I have avoided him at all cost. I have a feeling that the reason why people say he is so hard is because it is math heavy. Generally people have trouble with math. What was the average grade. Any thing I should know going in!
there is a lot of talk about some commercial mortgages being in real trouble. wondering where you see big problems/opportunities and how to gain exposure to this?
I am somewhat familiar with the 2008 housing market crash, banks being greedy (CDOs with subprime bonds) and how credit rating agencies marked these subprime bonds as "not risky," but the underlying bonds fail only if millions of Americans do not pay their mortgage, why in 2007~2008 did so many ARMs default?
Is it because there were no checks like income verification and banks just wanted to write up mortgages?
I've been avoiding MBS through what amounts to a knee-jerk reaction to 2008. It occurred to me that maybe there's a value opportunity there? With jobs strong and inflation and interest rates holding steady, seems like an ideal environment for MBS.
Pros/cons, and recommendations for worthwhile ETFs?
I was listening to this Planet Money podcast earlier and it left me with more questions than answers.
https://www.npr.org/2020/04/08/830237502/episode-989-what-if-no-one-pays-rent
Can someone please EXLI5 the details on the Agency 'guarantee' of payment and its effect on mREITs holding predominately agency MBS'?
CARES ACT allows mortgage forbearance for up to 12 months. I know the specifics of re-payment will vary depending on lender and servicer (loan modifications, catch up payment plans or deferral and balloon payments).
For the sake of simplifying my question let's assume every forbearance case results in deferral and all payments due at the end of the deferral period - most homeowners would not be able to make a year's worth of mortgage payments in one lump sum, ultimately leading to foreclosure.
What exactly are the agencies guaranteeing? Continued interest payments for the duration of the loan term to investors (15/30 years)?
does anyone have or know where can I find the data for the mortgage-backed securities/Mortgage bonds or CDOs/CMOs from 2004-2008? in 2006 there were 27k MBS's, is there a dump from one of the rating agencies or banks?
I promess I'll make cool graphs so you can see when shit hit the fan and you can laugh at people for being stupid
I'm considering expanding my newly formed long position in bank of America (BAC) on the grounds that any significant recovery will hinge on lncreased lending, and that the future by necessity will be characterized by increased rates (albeit not for some time). One of the obvious near-term risks is the the collapse of commerical real estate, and with it entities entangled in the scandalous inflating by borrowers of their financial qualifications for securing loans. I'm trying to gauge BoA's exposure, relative to other financial institutions, to commercial Mortgage-backed securities, as well as their involvement in facilitating that market. How does one go about doing this? Where can this information be found?
There is this line in Big Short that stuck with me - That is until Lewis Ranieri came on the scene at Salomon brothers you might not know who he is but he changed your life more than Michael Jordan, the I-pod and YouTube put together!
Lewis R. is the man behind MBSs, is his impact on modern banking (and life as we know it) such a big one? Or is this a hyperbole?
*Looking at MBS in the big picture, they just free up capital for bank - am I missing the depth of this?
1.What are the difference if any and what do these company do much as MFA financials and NRZ. 2. How do they operate and make profits?
Saw MFA financials used to be $7.50ish and NRZ used to be $16.50ish. Are these a good buy? Sorry if I used some terms wrong, new to investing hope the best and wisest Investors are here on Reddit to answer me or give me some wisdom.
If the fed continues to buy random risky assets from its member banks, assets like mortgage backed securities and the commercial equivalent of those (which are loans to businesses basically - right?), then why can’t banks just always lend willy nilly and then sell those assets of to the fed who then assumes the risk? And if this CAN happen then theoretically 2008 couldn’t happen again right? Because when people/businesses default that’s the Feds liability but... the Fed can create credit/money out of thin air so it’s okay.
Summary (TL;DR)
Many people who study the financial crisis which started in 2008 know about "MERS", or "Mortgage Electronic Registration Systems" - a company / database containing over 62 million mortgages.
(The word "mortgages" may be unfamiliar to some non-English speakers - since it is not a cognate with most other languages. In French, they say "hypothèques", or "hipotecas" in Spanish, "Hypotheken" in German, etc).
The goal of MERS was to "optimize" the process of transferring "title" (legal ownership) of real-estate mortgages, from one owner to another.
But instead, in the 2010 "foreclosure crisis", MERS caused tens of billions of dollars in losses and damages - due to the "ususual" way it handled the crucial "ownership data" for real-estate mortgages - the data at the very heart of the database.
https://duckduckgo.com/?q=%22foreclosure+fraud%22+%22robo+signing%22+MERS&t=h_&ia=web
How did MERS handle this crucial "ownership data" for real-estate mortgages?
The "brilliant" idea behind MERS to "optimize" the process of conveying (transferring) mortgages was to separate - and eventually delete - all the data proving who transferred what to whom!
Hmm... that sounds vaguely familiar. What does that remind me of?
SegWit separating and then deleting the "chain of (cryptographic) signatures" for bitcoins sounds a lot like MERS separating and then deleting the "chain of (legal) title" for mortgages.
So, SegWit and MERS have a lot in common:
-
SegWit is a "clever innovation" brought to you by clueless / corrupt AXA-owned Blockstream devs;
-
MERS is a "clever innovation" brought to you by reckless / corrupt Wall Street bankers;
-
SegWit and MERS both work by simply deleting crucial "ownership data" for transactions.
Of course, the "experts" (on Wall Street, and at AXA-owned Blockstream) present MERS and SegWit as "innovations" - as a way to "optimize" and "streamline" vast chains of transactions reflecting ownership and transfer of valuable items (ie, real-estate mortgages, and bitcoins).
But, unfortunately, the "~~b
... keep reading on reddit ➡Today's #1 comes from the GSA, representative of the one, the only, J Pow and the Money Printers. The GSA are looking for brokers to buy and sell Mortgage Backed Securities. The Dept of Treasury holds Trillions of (MBS) bond they bought to prevent the collapse of the American Economy. This is probably a retirement contract. That means after this contract, you don't have to work anymore!!!
Contract Opportunity Type: Sources Sought (Updated)
All Dates/Times are: (UTC-04:00) EASTERN STANDARD TIME, NEW YORK, USA
Updated Published Date: Apr 22, 2020 02:31 pm EDT
Original Published Date: Mar 13, 2020 10:31 am EDT
Updated Response Date: Apr 28, 2020 02:00 pm EDT
Original Response Date: Mar 31, 2020 02:00 pm EDT
Inactive Policy: Manual
Updated Inactive Date: Apr 17, 2021
Original Inactive Date: Apr 15, 2020
Initiative: None
Classification
Original Set Aside:
Product Service Code:
NAICS Code: 522320 - Financial Transactions Processing, Reserve, and Clearinghouse Activities
Place of Performance:
Washington , DC
USA
Description
Services to support Ginnie Mae’s securitization process, which includes the following task areas: Mortgage Backed Securities (MBS) pool processing, delivery of securities, collection and payment of funds, transfer of Mortgage Servicing Rights (MSRs), Operations and Maintenance (O&M), hosting of the related Ginnie Mae pool processing and paying and transfer agent systems, applications and software, and hosting migration services.
With all the rating agencies saying how they have been giving better ratings for increased market share and throwing out the policies that were put in place after the last housing market crash I want to short them. Plus lenders are saying the amount of people buying homes and refinancing due to mortgage rates dropping so they might be fucked again.
Lately I have been informing myself about economics, I want to learn more about it. In one of the readings I came across the 2008 crisis came up. From what I understood the economy crashed because banks started lending money to everyone and their mother. Things like mortgage backed securities came up, I didn't understand what this was and ended up getting confused.
Can someone explain? I'm a CS major and all of this id rather confusing for me.
What about prepayable securities?
This was a big factor in the 2008 financial crisis. Can someone please explain more about this type of investing?
