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You wouldn't have invested in a Triple A rated mortgage-backed securities pool that said this is as good as Treasuries, but offered fifty extra basis points of yield.
More important, Rosner says, ratings firms shouldn't get to use an exemption from liability for rating a securities pool that later goes down in flames.
Its a form of leverage, financing, that lets you work out the monetization of the mortgage-backed securities pool over the longer term so you dont have to sell at fire-sale prices..
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Only greater transparency will lure investors back into these securities pools.
Countrywide packages most of its loans into securities pools that it sells to investors.
Mortgages that are eligible under section 306(g) of the National Housing Act (12 U.S.C. 1721(g)) for inclusion in GNMA mortgage-backed securities pools.
According to Inside Mortgage Finance, some eight million nonprime mortgages were put into securities pools in 2005 and 2006 and sold to investors.
As real estate prices peaked in the middle of the last decade, Citigroup and other banks dived headlong into C.D.O.'s, bundles of mortgage securities pooled together and sold to investors who wanted to benefit from the housing boom.
At Citigroup, for example, 29 percent of the sample failed to meet underwriting standards over the period, but almost a third of those substandard loans made it into securities pools.
A federal judge in Ohio has ruled against a longstanding foreclosure practice, potentially creating an obstacle for lenders trying to reclaim properties from troubled borrowers and raising questions about the legal standing of investors in mortgage securities pools.
Banks were eager to finance property deals, thanks to a white-hot market in commercial mortgage-backed securities — pools of bank loans backed by real estate from hotels, offices and stores that are then sold to investors and removed from bank balance sheets.
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