FIN 2227 Study Guide - Final Guide: Government National Mortgage Association, Freddie Mac, Mortgage Loan
Document Summary
Mortgage loan secured by collateral of real estate, which obliges borrower to make predetermined monthly payments. Originators = lender: origination fee, pti and ltv ratios: the lower, the more protection, conduit fed sponsored or agencies that buy and sell mortgages. Servicers: servicing fee, interest, float on monthly pmt, ancillary income. Arms contract rate reset periodically with reference rate. Nonconforming mortgages don"t satisfy all underwriting standards. Risks: credit risk factors associated with lower default rates, smaller ltv ratio, more documentation, shorter term, fixed rate, liquidity risk. Interest rate risk: prepayment risk, wac and wam. Chapter 11 mortgage pass-throughs through to security holders (less fees) Pass-through security pool of residential mortgages with all monthly payments passed. Agency pass throughs ginnie mae, fannie mae, freddie mac; all low risk and guaranteed: pool prefix info about loans in the pool, pool factor - % of pool balance outstanding. Psa prepayment model: assumes prepayments are slow at first and will speed up with seasoning.
