notecards - less than the full documentation required of a...

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Securitization of Mortgages 1. Banks packaged and sold MBS and collateralized debt obligations 2. Banks would not have gotten into trouble if they would have sold everything What is a CDO? 1. Bond issued by a trust that owns Fixed income debt obligations Structured investment vehicle 1. type of fund held off the BS of the bank that borrowed money by issuing short term securities @ low interest and then buy long term securities @ higher interest. Making a profit for investors from the difference Alt-A Mortgage 1. loan that is underwritten with lower or alternative documentation that is
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Unformatted text preview: less than the full documentation required of a prime loan 2. btw prime and subprime Benefits of Securitization 1. ability to remove asets from BS 2. new funding source 3. ability to reduce regulatory constraints 4. custom tailoring investment size, risk and timing of returns. 5. Liquidity 6. Diversification Not surprising they didn’t see this coming 1. mortgage bankers 2. appraisers 3. rating agencies 4. underwriters 5. acct firms 6. congress and president 7. SEC i. EVERYONE MADE MONEY BY DOING WRONG...
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