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1. 

   Comment by MrTaco905 on 10 December 2010:

   its over 9000!!!!!!
2. 

   Comment by MrGradehunter on 10 December 2010:

   Is a MBS a company share of the S.P.E in the legal sense?
3. 

   Comment by CardinalRaker on 10 December 2010:

   Thanks. Good videos. Bankers, wall streeters, insurance people are bottom feeders
4. 

   Comment by ricardopoper on 10 December 2010:

   @smokenfly514 There are fees, interests and maybe higher sell or transaction costs. He made the 1.1B -> 1.1B for simplicity purposes.
5. 

   Comment by yuansavvy1 on 10 December 2010:

   For institutionally insured – actually profits come from CDS – insurance of the MBS and its derivatives – because you do not need to be the holder of the securities to insure them. But holding the discounted certificates and insuring them for face generates fantastic profits – ala Goldman Sachs Abacus 2007.
6. 

   Comment by yuansavvy1 on 10 December 2010:

   You may try CTSLINK (Wells Fargo) or BAC (old LaSalle). You will find out that the particular traunches – First Loss or B-Piece is not publicly traded – it is privately bid.

   Traditionally bonds with coupon higher than prevailing interest rates (market rates) would trade at a premium – this is still the case in senior classes of MBS.
   Price moves counter to yields in bond market which MBS is a part of. I understood the question this time.
7. 

   Comment by yuansavvy1 on 10 December 2010:

   Two reasons 1) The best place for fake money is MBS to convert it to securities, 2) The secondary market on MBS certificates is a sham – see if you can get the certificateholders list from REMIC trustees. This also helps reason 1) above. Bloomberg (bond terminal) has access only to certain classes (certificateholders)
8. 

   Comment by smokenfly514 on 10 December 2010:

   @yuansavvy1 Thanks a lot, that’s pretty interesting! But what I meant is why does the secondary market value increase to a non-attainable amount
9. 

   Comment by smokenfly514 on 10 December 2010:

   @yuansavvy1 I’m all ears
10. 

    Comment by yuansavvy1 on 10 December 2010:

    @smokenfly514 – If you need to know how the Special Servicer steals from investors, borrowers, guarantors and sometime the depositors, I will be glad to explain. This is beyond Khan’s Academy. This Khan’s PHD program now!
11. 

    Comment by yuansavvy1 on 10 December 2010:

    Smokeyfly514 – “why banks loan $1B to only sell them to investors for less (10% defaults)?” – there are two Prospectuses for REMIC trusts (REMICs issue Certificates). The second one (PRO SUPP) that gets funded contains (bogus) loans – those that create the 10% default+ profit. Trust starts with 80-90% in real loans. The private buyer of B-Piece (AKA First Loss) knowingly invests in high-risks for the right as “Controlling Class” to name the “Special Servicer” who will strip the trust for them.
12. 

    Comment by smokenfly514 on 10 December 2010:

    Can someone please explain to me WHY this guy says – in the 2nd video – that the value of this $1.1B owed to the creditors would be $1.1B ?? It’s like loaning money with no interest and risking losing a good part of it. Thanks a lot, I really don’t get it
13. 

    Comment by oletty on 10 December 2010:

    Thank you so much for this. I am an engineering techie who has become deeply interested in economics and finance after the 2007-2009 financial crisis. Your videos provide valuable and clear explanations to complicated subjects I am currently reading about.
14. 

    Comment by theporksicle on 11 December 2010:

    @dekes58
    I suppose on the one hand that’s fair, with one of these bonds you are buying a fixed income asset, you expect to get your X% and no more, its not like a stock with a variable dividend based on performance.
    However I think it would only be fair if they put the money aside to make up for any defaults and if there was not enough defaults to use it all up at the end the bank could keep, it of course with banks being banks this would never happen.
15. 

    Comment by dekes58 on 11 December 2010:

    @theporksicle Well then, no doubt the bank would pocket that and the “investors” would at best get their 10%
16. 

    Comment by theporksicle on 11 December 2010:

    @dekes58
    I know, I was saying hypothetically what if the person couldn’t pay and the house is repossessed and in the intervening period of time between the repossession of the house and the auctioning property values rise dramatically, what would happen to the surplus above the amount the mortgage was issued for? I doubt this situation arises often it was just a hypothetical question.
17. 

    Comment by dekes58 on 11 December 2010:

    @theporksicle If your house is worth 1.5 mill in that case then you should have no problem getting a “home equity” loan from another one of these greasy loan companies if not the same one. Or you could sell it for 1.5, pay off the mortgage, and walk with the cash
18. 

    Comment by theporksicle on 11 December 2010:

    What happens if property values rise in the period between the loan being issued and the debtor defaulting (as you’ve explained elsewhere usually people don’t default when property values are rising so one would have to assume some external reason existed)? So the debtor was loaned $1 million for the house, the house is auctioned off and it fetches a price of $1.5 million- is that extra $500k distributed to everyone or just the top tranche of investors?
19. 

    Comment by back2root on 11 December 2010:

    @AlbinoRodriguez
    I think in most of the cases the investmentbank holds 100% of the shares, but is issuing cdos…
20. 

    Comment by back2root on 11 December 2010:

    @AlbinoRodriguez
    I think the shareholders of the SPV, because the SPV is the owner of the mortgages
21. 

    Comment by Niehiels on 11 December 2010:

    Are mortgage backed securities completely the same as asset backed securities?
22. 

    Comment by socomplete on 11 December 2010:

    The question is who can these special purpose entities be? Are these spe’s crooks?
23. 

    Comment by AlbinoRodriguez on 11 December 2010:

    But how if the SPE is formed 100% from money of the investors. Where did you get that officers hold 51% of the stock authorized? I am interested in learning more about it.
24. 

    Comment by occidental88 on 11 December 2010:

    I believe that the SPE still maintains ownership of the loan rights because the officers collectively still hold more than 51% of the stock authorized. This is why today we are seeing investment banks that are losing tons of cash through these deals that were top-heavy a few years ago in the housing market. Investors obviously have gone through huge dividend cuts so everyone really loses.
25. 

    Comment by MrMortgage1 on 11 December 2010:

    mortgageartist. com

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