Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2
➤ Gửi thông báo lỗi ⚠️ Báo cáo tài liệu vi phạmNội dung chi tiết: Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2
Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2
Banking and FinA Guide for Directors. Investors, and Counterparties by Benton E. GupCopyright © 2011 Benton E. GupReal Estate and Consumer LendingFede Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 eral Deposit Insurance Corporation (FDIC) Chairman Sheila c. Bair said:1For many decades U.S. government policies have promoted bousing in general and homeownership in particular. These policies have been very successful in raising the quality of our housing stock tvbile extending the benefits of ho Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 meownership to more than two-thirds of American households.... But now that our housing bubble has burst... we must recognize that the financial crisiEbook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2
s was triggered by a reckless departure from tried and true, common-sense loan underwriting practices.... Traditional mortgage lending worked so well Banking and FinA Guide for Directors. Investors, and Counterparties by Benton E. GupCopyright © 2011 Benton E. GupReal Estate and Consumer LendingFede Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 ke regular payments at the fully-indexed rate of the loan. Not only were these bedrock principles relaxed in the runup to the crisis, but they were frequently relaxed all at once in the same loans in a practice regulators refer to as "risk layering. ”.As all of you know, the long-term credit perform Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 ance of a portfolio of mortgage loans can only be as sound as the underwriting practices used to originate those loans.’REAL ESTATE LENDINGMortgage DeEbook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2
bt Outstandingrhe term mortgage is used in connection with real estate lending. In general terms, a mortgage is a written conveyance of title to real Banking and FinA Guide for Directors. Investors, and Counterparties by Benton E. GupCopyright © 2011 Benton E. GupReal Estate and Consumer LendingFede Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 ebt Outstanding by Type of Property, Fourth Quarter 2009 (S> millions)1- to 4-family residences$ 10,772,2720,75Multi fa m i 1 y residences898,8526Nonfarm, non residential (commercial)2,477,61417Farm138,6021local$ 14,287,3401Source: Board of Governors of the Federal Reserve System, “Mortgage Debt Out Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 standing, March 2010,” Totals do nor add to 100 percent due to rounding.www.federalreservc.gov/cconresdara/rcleascs/morroutsrand/currenr.hrm.properlyEbook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2
recorded in the county courthouse. It also provides that the property being used as collateral for the loan will be sold if the debt is not repaid as Banking and FinA Guide for Directors. Investors, and Counterparties by Benton E. GupCopyright © 2011 Benton E. GupReal Estate and Consumer LendingFede Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 ccounts for 75 percent of the total mortgage debt outstanding. Nonresiden-tial and nonfarm commercial buildings and other business real estate loans are called commercial mortgage loans, which are the second largest category of mongage loans. Multifamily residences and farm mortgages account for rhe Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 remainder/’Mortgage loans are originated by commercial banks and other financial institutions. The originating institutions may hold the mortgages inEbook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2
their loan portfolios or sell them in the secondary market. The secondary mortgage market, in which securities representing pools of mortgage loans aBanking and FinA Guide for Directors. Investors, and Counterparties by Benton E. GupCopyright © 2011 Benton E. GupReal Estate and Consumer LendingFede Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 ageloans are one type of asset-backed securities.The process of transforming individual loans into marketable asset-backed securities is called securitization. The process involves the issuance of securities that represent claims against a pool of assets (e.g., mortgages, car loans, credit card rece Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 ivables, and small business loans) that are held in trust. 1 he originator of a loan sells the assets to a trust, it must be a true sale, which meansEbook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2
that the assets cannot be returned to the originator’s balance sheet. The trustee then issues securities through an investment banker (underwriter) toBanking and FinA Guide for Directors. Investors, and Counterparties by Benton E. GupCopyright © 2011 Benton E. GupReal Estate and Consumer LendingFede Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 they service (collect loan payments, deal with delinquencies, and so on) the loans, too. As the principal and interest payments are made on the loans, they are paid out to investors by the trustee or servicer, whoReal Estate and Consumer Lending151retains a small transaction fee. In many cases, rhe Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 cash flows ro investors are guaranteed (credit enhanced) by bank guarantees (standby letters of credit), by government agency guarantees (c.g., GovernEbook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2
ment National Mortgage Association), or by having more loans than is necessary to secure rhe value of rhe pools (overcollateralize)- Credit raring ageBanking and FinA Guide for Directors. Investors, and Counterparties by Benton E. GupCopyright © 2011 Benton E. GupReal Estate and Consumer LendingFede Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 ent is an important part of rhe raring. The credit enhancements, credit ratings, and rhe reputations of rhe investment banker or packager help to standardize the quality of asset-backed loans. 1 iowever, the financial crisis that began in 2007 revealed that many of the credit ratings and enhancement Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 s were flawed.The Dodd-Frank Act of 2010 requires that firms that originate mortgage-backed securities must retain at least 5 percent of the credit riEbook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2
sk. In other words, they must have some skin in the game to ensure that these securities meet new credit standards that are aimed at reducing risk.OneBanking and FinA Guide for Directors. Investors, and Counterparties by Benton E. GupCopyright © 2011 Benton E. GupReal Estate and Consumer LendingFede Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 package otherwise unmarketable individual mortgage loans and sell them to investors. Another benefit is that the secondary market has attracted investors from outside the traditional mortgage investment community who want to buy mortgage-backed securities. Thus, the secondary mortgage market has in Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 creased rhe breadth, depth, and liquidity of the capital marker that is available for mortgage financing.The three major participants in the secondaryEbook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2
market arc the Federal National Mortgage Corporation (Fannie Mae), the Federal Home Loan Mortgage Association (Freddie Mac), and rhe Government NatioBanking and FinA Guide for Directors. Investors, and Counterparties by Benton E. GupCopyright © 2011 Benton E. GupReal Estate and Consumer LendingFede Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 age pools or trusts of one- to four-family real estate, mulrifamily real estate, and certain other properties. Congress also created the Farmers 1 lomc Administration, but it is a very small factor in the secondary mortgage market. Some private organizations also operate in the secondary mortgage ma Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 rker. As shown in Table 7.2, mortgage pools and trusts hold more than half of rhe total mortgage debt outstanding. The table also reveals that commercEbook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2
ial banks hold more mortgage debt than savings institutions, life insurance companies, and federal and related agencies.The Federal Home Loan (EHL) RaBanking and FinA Guide for Directors. Investors, and Counterparties by Benton E. GupCopyright © 2011 Benton E. GupReal Estate and Consumer LendingFede Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 nancial institutions, insurance companies, and state housing finance agencies are members of the Federal Home Loan Bank system. They have branches throughout the 50 states and the152BANKING AND FINANCIAL INSTITUTIONSTABLE 7.2 Mortgage Debt Outstanding by Type of Holder, Fourth Quarter 2009 ($ millio Ebook Banking and financial institutions: A guide for directors, investors, and counterparties – Part 2 ns)Commercial banksSavings institutionsLite insurance companies Federal and related agencies Mortgage pools and trusts Individuals and othersBanking and FinA Guide for Directors. Investors, and Counterparties by Benton E. GupCopyright © 2011 Benton E. GupReal Estate and Consumer LendingFedeBanking and FinA Guide for Directors. Investors, and Counterparties by Benton E. GupCopyright © 2011 Benton E. GupReal Estate and Consumer LendingFedeGọi ngay
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