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Unformatted text preview: l __—_—____—_——-— __________—________—— __—__——_———— _—_._———-—.-.-——_—— ——_—___—_ —___—_—_____ —_____—__________ _—_———_______ m m _—-‘——~—__— “m _—___——_h~—I W‘— N -‘._aeia . , Mortgage-Backed Securities (cont’d) I Interest rate risk on mortgage—backed securities El Payments received from mortgages are tied to the payments sent to security owners El Institutions can Insulate their profit margin from interest rate fluctuations m—mesi = Mortgage-Backed Securities (cont’d) - Prepayment risk on mortgage-backed securities El Owners of pass-through securities are exposed to prepayment risk because of the borrowers right to prepay in part or in full without penalty El Owners of mortgage—backed securities are also subject to the possibility the! prepayments are decelereted in response to rising interest rates (twinned ai‘ctll-it intmi rat 8 'w Mortgage~Backed Securities - Ginnie Mae mortgage-backed securitics El Ginnie Mal intent-es time payment of principfl end intern": investors In HA chA mortgage! El All momma peeled together must hiv- tl‘n sum- interellrlte . mmwwwmhmflmmm‘ I Fannie Mae mortgage-backed securities a Fannie Mae issuu mortgage—buried securities and um the tunes to pudusl mortgages D chennels funds tram inventors tn finencill institutions that dealt-a tn sell their menu-gel Cl Revival In [or uirantuu' trrialy nt of mm land int-rent to the tiniest: at the $9.19. new «tutti-5pa El Sumemnrl bedwdsewrifieaere Illippedbyupurli the principal “film-m payments W ...
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