Author Reference resources: new home loans, home loan application, repair loan, home loan modification, homes equity, load rates, lic home loan www.himloan.infoA subprime mortgage crisis:Because subprime lenders cannot usually through the absorb deposits and receive money, to acquire the liquidity, to reduce the financing cost or tax avoidance and other factors, the agencies will have specific term, interest rates characteristics of the subprime home loans pool of assets, this as cash flow support, through the real sale, bankruptcy isolation, credit enhancement technology issue residential mortgage backed securities (MBS). Early MBS limited to count the securities (pass through security), according to investors to buy the stock of the intact will share the fundamental asset generated cash flow directly "changed hands" to investors to pay the principal and interest of the bonds. Count the structure of the corresponding is equity class vouchers, namely the rights holders directly with the ownership of the mortgage assets, so that there is no stock level and pay the difference of speed. This structure based assets not do any cash flow processing, each investors accept the same risk and pay principal and interest to meet the different risk preference income investment needs. Therefore, FenDang technology (tranching) was introduced into the securitization of product design, the creation mortgage-backed bonds (collateral mortgage obligation, CMO). And FenDang according to investor is to time limit, the risks and benefits of different preferences, to the cash flow to the fundamental asset stripping and restructuring, will bond design into different grades, in order to reflect principal and interest payments, the difference of risk to bear ability, which can meet the needs of the sponsors the transfer of risk, and to meet the different preferences of investors. Based on MBS further issues asset-backed assets of securities, derive a numerous personalized guarantee debt obligation (collateral debt obligation, CDO). This process can continue to derivatives, and produce CDO square, CDO cubic etc. Product.
Subprime home loans is the above credit derivatives initial foundation assets, therefore, of the status of the subprime home loans directly or indirectly with these products to the market. Once the subprime mortgage crisis, the above products market will be hard to bacon. And because of the asset-backed securities and derivatives trading and the lever, the entity economy fluctuations (such as real estate market volatility) will make these credit derivatives market and related financial markets has more extreme volatility, and that is the subprime home loans to the crux of the crisis.
Subprime home loans is the above credit derivatives initial foundation assets, therefore, of the status of the subprime home loans directly or indirectly with these products to the market. Once the subprime mortgage crisis, the above products market will be hard to bacon. And because of the asset-backed securities and derivatives trading and the lever, the entity economy fluctuations (such as real estate market volatility) will make these credit derivatives market and related financial markets has more extreme volatility, and that is the subprime home loans to the crux of the crisis.
