01:450:250 Lecture Notes - Lecture 13: Legal Personality, Investment Banking, Financial Technology
1 Apr 2019
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Document Summary
A person would put a 20% down payment - ,000. Said person would then take a loan to pay the remainder - ,000. Homeowner gets key to home after brokerage of deal, but paper that holds the terms of agreement belongs to the bank instead. Said person now pays the bank in monthly installments. Over 30 years at 5% interest rate ends up being ,000. Once payment is complete person now has ownership and deed of the home. Securitization is the financial technology that integrates the market for residential mortgages into the capital market. Local banks hold the mortgage funds and contracts that homeowners in the area owe. Hedge funds and interest banks now try to take the local mortgage pool and make it accessible to the larger accessible market. Makes a spv, special purpose vehicles, a separate legal entity associated with the original bank.
