Mortgage-backed securities II

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Part II of the introduction to mortgage-backed securities

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    1. Comment by JasonRox88 on 6 December 2010:

      The reason why Sal is so successful at teaching because he knows his topics.

      I believe the education system in the US/Canada is failing mainly because so many teachers fail to know their own topic. The focus is largely on teaching methods which in my opinion is useless without a proper understanding of the topic. I have seen easily hundreds (former teaching assistant) of students go into teaching and are CLUELESS to what they teach. They are motivated and great people but they are CLUELESS.

    2. Comment by TopBreh on 6 December 2010:

      @honest 4truth
      i fink the investment banks set up the special purpose vehicles/entities (spv/spe) so they cud get the loans off their balance sheets.
      in this video he says investment banks may have done this because they are not in the business of dealing with mortgage loans however i rekon that they knew a number of these loans were very very risky and so transferred this risk onto shareholders, mutual funds, hedge funds and pension funds etc.

    3. Comment by itsbenyboy1 on 6 December 2010:

      thank you very much

    4. Comment by ifginc on 6 December 2010:

      Get easy home finance from Integrated Financial Group,Inc, your mortgage bankers.

    5. Comment by amalmansy on 6 December 2010:

      thank you very much :)

    6. Comment by smokenfly514 on 6 December 2010:

      If you’re entitled to 110$ a year in the mentioned case, why would you pay 110$ for that right? This makes no sense

    7. Comment by isisqueenafrika on 6 December 2010:

      The crooks behind lenders, such as WMC Mortgage, need to be in jail!!!!!!!!!!!

    8. Comment by ZakBrownrigg123 on 6 December 2010:

      absolutely phenomenal explanation of a subject that is often left very confusing to laymen

    9. Comment by gredangeo on 6 December 2010:

      wait a second, with a system like this, could a homeowner buy a share into his own mortgage? Essentially paying himself, but with the bank as the middle man reaping most of the profit? F***ing bankers!

    10. Comment by hannahunney on 6 December 2010:

      So the only way for the corporation to stay in business is high turnover in the housing business? Right?

    11. Comment by strac90 on 6 December 2010:

      love your videos dude. I’m studying this kind of stuff but in Australia so some of it’s a bit different but most of its the same and your videos have been a great help, so thank you! Just wondering if you have any plans in the future to do a video on fixed vs. floating exchange rates? If so that would be just perfect :)

    12. Comment by sisip123 on 6 December 2010:

      I dont need a commerce degree I can just watch this :)

    13. Comment by andykala1000 on 7 December 2010:

      dude, effing awesome :D love it.. I’m writing a thesis for my Swedish university on the financial crisis, and hear about this morgage backed securities and have never understood the meaning, especially since there is no direct translation to swedish :D but now it so much more clear :D BIG UPS MAN!

    14. Comment by thegoonist on 7 December 2010:

      but in this case wouldnt the first bank lose money? since it doesnt earn interest (it sold the loans to the I-bank) and has to pay those people who deposit $ in it interest annually?

    15. Comment by urvish1789 on 7 December 2010:

      Okay bt responding to TML the NPV of the project i.e. purchasing a share will be -ve @10% disc.y will sumone purchase it…??

    16. Comment by socomplete on 7 December 2010:

      It sure is amazing, the banks are the ones who win with these mortgage back securities. The people loose because they owe that bank regardless if they loose they job or not. I want to open a bank… LOL :-)

    17. Comment by MsMcwill on 7 December 2010:

      @tml337

      They pay $1100 up front to get $100/year
      for 10 years. So they get a total of $2000
      paid back at the end of the 10 years.
      ($1000 principle + $100/yr * 10 yr interest
      payments). This is appealing to pension
      funds or retirees bc they get a steady
      stream of interest payments.

    18. Comment by tml337 on 7 December 2010:

      Why would the investor slash new shareholder pay $1,100 up front to only get $1,100 over time? I’m gonna assume you meant that they pay a lot less than that but that the investment bank that created the corporation still makes more than what they spent.

    19. Comment by tml337 on 7 December 2010:

      @honolulutradewind

      - GrammLeachBliley Act 1999

    20. Comment by SuchisLifeIA on 7 December 2010:

      continued.. who made the extra layer and stimulated the purchases, are the ones who should be bailed out. Hmm.. do you have lessons on the bail out plans and the medical overhaul?

    21. Comment by SuchisLifeIA on 7 December 2010:

      So.. the person in the red is the person who went to buy the house. He also purchases those stocks for his retirement, and he is the one who loses his job. Since he is losing at both ends, he kind of changes the easy money scene for those with their secure securities. Without those taking out the home loans and buying the stocks disappear from the market because they have no job. Ok.. thinking thoughts. I’ll go back to listening. I’m waiting to hear why in this framework the large companies

    22. Comment by CBossyful on 7 December 2010:

      Since the investors are buying loans, its a type of bond.

    23. Comment by TomekLeeChan on 7 December 2010:

      So this “shares” are stock or bonds?

    24. Comment by Kikkan110 on 7 December 2010:

      It makes 5m risk free, but it could have made much more with some risk in the long run (according to this model) if it would keep its loans. The irony is that if banks starts to behave this way the banks who operates more traditional (not sell their loans) would be stuck with all the downside if (when) the housing market tanks. So a bank has every incentive to get rid of housing loans and make short term profits and thus further increase the incentive to make rotten loans.

    25. Comment by catharthic on 7 December 2010:

      i think it is because they are getting cash (lots of it) every time they try this model…then they can replicate it again and gain more cash in one short period of time rather than over the course of 10 years even if it would have been more.

      someone correct me if i am wrong.

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