Securitization practice is a crisis of credit securitization of housing loans bad credit, is currently the world is not the reason behind their loans. As the securitization, the mortgage interest of investors (MBS) of the Securities and investment rating agencies assign ratings grade trends in mortgage securities, packaging and any transfer of risk to others and the acquiescence of high-risk loans to be originated. Subprime mortgage crisis in the traditional model, involving bank loans homeowner or the borrower's credit risk and reservations. Are issuing mortgage securities no longer need to hold the meaning of maturity, but their crystallization in the securitization crisis may also lead to the practice of the leaders of the requirements of no more subprime crisis held the secondary market to mature. The traditional model has given way to the "from distribution" and the future of the securitization model, that bank loans through mortgage-backed securities issued primarily to sell mortgages and credit risk investors
In this case would create a kind of moral hazard, one of the mortgage transaction processing is more emphasis on incentives. Securities, including mortgage-backed securities, acceleration, mid-90s, but the total amount of securities issued mortgage loans almost tripled in 1996 to 2007, reaching .7.3 trillion. We can be found from the mortgage securities, subprime mortgage securities in the proportion of about 21% increase, from 54% in 2001, 75% in 2006.
Mortgage loan divided by the credit risk securitization mechanisms, and with the broad areas of global investors and the impact of the credit crisis, felt around the world, be passed to other investors. 2008, U.S. households, companies and consumers about 25 trillion U.S. dollars owed, while the Bank of America retained about 8 trillion dollars, the total direct as a traditional mortgage loans, the remaining 10 trillion is from the securitization market Lai . Securitization market to close in the spring of 2007 and 2008 fall off. However, in February 2009, Bernanke said the securitization market remains effectively and meet the mortgage exception closed.
Financial institution and banks need to resorted to securitization of the pool of asset to shift the risk to investors in these securities as well as to obtain funds well ahead of the scheduled tenor of these asset once mortgage backed securities started flooding the market. Besides that it's also implied that organizations/issuers in repeatedly re-lend a given sum, greatly providing a multiplier effect of the underlying national and increased their fee income. The issuers could lower their underwriting practices to increase their loan disbursements with increasing securitization deals being struck. Moreover, issuers can through deep understanding of the securitization process, practitioners' technical, regulatory, and tax knowledge to be recognized once again as the standard of excellence in securitization accountancy services.
In the capital markets a broad term, securitization can be seen as collection of receivables and the sale of credit receivables. As an example, the lender can sell the mortgage pool of mortgage loans receivable debt with investors. Historically, the United States in the 20th century, the first time 70 years mortgage loan securitization pool. Auto loan receivables, credit card receivables and home equity receivables mortgage-backed securities must be securities of success.
Although most of the debt securities of the principle of consumer receivables, receivables in any cash flow, we can assume that there may be securities. The cost of the securities of mutual funds, movies, revenue, tobacco settlement payments, royalties, and even music are also known as "foreign" securitization. In addition, student loans, equipment leasing, commercial mortgage loans, manufactured housing loans or securities are also considered.
Securitization Basics
There have some common characteristics of securitized products. Firstly, they typically involve an originator of receivables who forms a pool of receivables then sold to special-purpose entity and this entity of securities was backed by beneficial interest in the receivables. It is very important to understand this process in detail because of get a successful securitization.
The originator of receivables identifies a pool of receivable to be securitized as a mortgage lender identifies which loans will from a particular pool for a securitization. As borrower and loan characteristics affect receivables and losses on a loan if the credit quality of the receivable pool is affected by its loan quality.
Special-purpose entity (SPE) typically is a type of trust is receivable from the originator and accounting rules govern by the balance sheet treatment of such a transfer. As an example, an originator can remove these receivables into its balance sheet if the transfer is classified as a sale, but in the case of financing can't be remove the receivables from the balance sheet. Besides that, ownership of the assets should be separated from the transferor to the extent that when transferor's bankruptcy from a transfer of receivables to be true sales but the transferor's creditors should not be able to access these receivables and jeopardize the beneficial interest of the investors in the securities.
In the pool, SPE issues securities was backed by the collateral of receivables. In the same collateral pool by issued different securities may have very difficult risk of characteristic, which depending on credit enhancements? As an example, senior tranche would have a relatively lower risk compare with other if senior tranche may have first access to pool receivables as compare with junior or subordinate tranche. Seemly, a credit enhancement such as third-party insurance of promised cash flows to lowers the credit risk of the security. Securities may carry different credit ratings by depending on the structure of the transactions. Securitizations structures also have evolved in complex ways to take advantages of diverse demands
These securities include differential risk may change on the lives of the securities may change on the lives of all of the securities. As an example, for the issuance of securities collateral pool credit risk depends on the basic performance and credit enhancement, must change over time. Lender's underwriting criteria, such as borrower credit scores (credit history, down payment, loan to value ratio, debt service coverage), economic variables (such as unemployment, recession, bankruptcy), loans, loan seasoning over ( payment) is an important factor affecting the performance pool. Through the use of credit enhancement will also affect the security provided more or less committed to the credit risk of cash flow. A securities additional protection can help achieve a higher credit rating of security and create new risk reduction required for the protection of the securities in different ways, and finally in different places with attractive terms to protect the safe. "Early Amortization" event can also trigger credit enhancement and the violation of the securities from the start of advance payments and the use of available resources SPE.
In particular, bond rating agencies, credit ratings assigned to each SPE's security, they will issue regular assessment evaluation. Therefore, the pool performance evaluation, security, allocation of cash flow and receivables will continue to provide services for. In addition, the periodic financial reports to regulators public offering of securities and receivables originator usually continue to service the receivables (example, account management and collection of outstanding receivables) of the cost.
Benefits of securitization practices
A funding of receivables from organization had be separates by an important idea behind securitization which provide cash flow and balance sheet management benefits, structural flexibility benefits, and deeper capital markets.
Cash flow and balance sheet benefits are allows lender to raise funds to originate more loans by again be securitization by selling loans in capital markets. Securitized assets can typically be removed from the balance sheet so will create a zero net balance sheet effect. In the other word, securitization can be improving revenues without additional balance sheet financing. Revenue from origination and servicing activities continues to grow when originator continue to service the securitized activities. By improving balance sheet liquidity, securitization can convert long-term and illiquid receivables into funds that used in additional value-generating investments. Moreover, a securitization can also help to manage any mismatch between assets and liabilities and in the extent perspective can use to allow for regulatory capital arbitrage.
Structural benefits transforming cash flow and risks of the collateral pool into those of the securities issued on the pool which arise from the flexibility available from securitization. As an example, creative use of credit enhancements allows relatively poor-quality receivables are transformed into some tranches of high credit quality and other tranches of low credit quality such as subprime loans. From the short term, revolving credit card receivables is possible to carve out long-term and no revolving securities. Structural flexibility is able tailor securitizations to their needs for originators and investors, different originators innovate to serve their needs may have more choice with particular needs.
Improved cash flows, better balance sheet management, and greater structural flexibility may be arising by deeper capital markets in principle. A high-quality asset may allow a relatively young firm to access capital market funds at lower cost with a low credit rating. Securitization may face market price discovery of illiquid assets by allow for the sales of precisely identified assets to be independent of the assets, allow greater financial innovation and better matching of sellers and buyers, and opening newer lending markets to offer deeper debt market penetration such as subprime lending.
Risks of securitization
From the original balance sheet has been recognized underperforming mortgage assets, threatening the financial position of the originator, the originator of such action would be resisted by shareholders and bondholders to require sponsors to provide an explicit guarantee, or to recover poor performance collateral. From the original balance sheet has been recognized underperforming mortgage assets, threatening the financial position of the originator, the originator of such action would be resisted by shareholders and bondholders to require sponsors to provide an explicit guarantee, or to recover poor performance collateral. Likewise, the creditor may consider the risks of securitization of assets and closure of the originator's balance sheet, the poor financial situation of the originator is to ensure the reduction. This action will jeopardize the insolvency of the collateral pool and questioned the legitimacy of investor claims in remote SPE. In addition, the focus started in the narrow, creating an incentive for excessive borrowing from credit loans slightly decreased.
From the more complex the structure, the more is the lack of transparency, difficult to analyze and predict the safety performance of the securitization approach. As an example, if long-term securities, short-term security of credit card receivables, the risk exposure of its receivables securitization amortization and cash flow to pay benefits as cash flow mismatch between the process. As the securitization practice, from their recently issued to the problem to a greater uncertainty on their performance by adding third-party insurance, subprime credit card receivables. In addition, the securities depends on the degree of risk the role of such structural changes will be made to a number of factors may be difficult and complex a reliable assessment.
When the collateral pool on a securitization has opaque or even hard-to-value assets means the lack of transparency is made it worst. As in principle, any receivable can be securitized- security that was created as a result of securitization can be used further in a new collateral pool issues new securitization; as the initial security is hard to analyze, some securities are pooled together and tranche off again when where a final security is inscrutable even with the most sophisticated analysis.
Besides that, a complex security is not an insurmountable obstacle to reap the rewards of securitization and in the uncertain times, complexity combined with lack of transparency will throw wrenches in the wheels of smoothly operating markets. Its means that market participants may be unwilling to pay high prices for securities that may turn to be bad investments and when reliable is unavailable and this happen can lead to a crisis of confidence severe enough to trade in particular securities grinds to a halt. Furthermore, by extending securities to other securities, interconnected debtors and creditors may serve to exacerbate and such a dynamic has been mentioned in 2007 as a core problem resulting in global credit market disruptions that started in the United States .
International Securitization Report
Securitization practice in the world, every major source of market and distribution of each type of authoritative, independent news and analysis, and investment, asset-backed and mortgage-backed securities are supported. ISR boasts extensive global contacts with the principle decision-makers in the securitization market which can ensures that readers are briefed on every aspect whether it is latest on a new structure, ground-breaking deal, a new mandate or a recent study of market trend. Besides that ISR also offers incisive coverage of significant news with commentary from the leading professionals involved and reports on the keys element of every important deal.
Internationally, the most comprehensive accounting standard on securitization is the SFAS which from Financial Accounting Standard Board .The Financial Accounting Standard Board (FASB) is a private, not-for-profit organization whose primary purpose is to develop generally accepted accounting principle which called (GAPP) within the United States in the public's interest. The Securities and Exchange Commission (SEC) was use in designated the FASB as the organization responsible for setting accounting standard for the public of companies and it was created in 1973 but replaced the Committee on Accounting Procedure (CAP) and the Accounting Principle Board(APB). FASB has also published an exposure draft of an FASB staff position (FSP) that would require about additional of disclosures relating to variable interest entities, pending effectiveness of the other amendments. The Financial Accounting Standard Board mission is to establish and improve standards of financial accounting and reporting for the guidance and education to the public which including issuers, auditors, and users of financial information. Financial Accounting Standard Board have 5 goals which are the first improve the usefulness of financial reporting by focusing on the primary characteristics of relevance and reliability, and on the qualities of comparability and consistency. Secondly, improve common understanding of the nature and purpose of information in financial reports. Thirdly, promote international convergence of accounting standards concurrent with improving the quality of financial reporting. Forty, consider promptly any significant areas of deficiency in financial reporting that might be improved through standard settings and the lastly is keep standards current to reflect changes in methods of doing business and in the economy to achieve the mission of Financial Accounting Standard Board.
Meyer Brown which one of the largest structured finance practices in the world with over 140 securitization lawyers in offices across Americans, Europe, and the Asia with that size comes the knowledge, experience and manpower tackle transactions of any scale in almost jurisdiction. As a financial market becomes increasingly integrated, working with a law firm that understands the complexities and nuances of the key technologies and markets can deliver that elusive competitive edge. Widely acknowledged as having one of the premiere securitization practices in the world and securitized virtually every conceivable asset type. When combined with our experience in the conduit, CDO and synthetic markets had offer experienced teams with the intellectual depth and industry insight needed to assist clients as they explore and maximize both current and developing market opportunities? Many of the securitization transactions that are commonplace today were 1st initiated by members and continue to be at the forefront of new development- whether it is the securitization of IP or non-performing loans, securitization as an acquisition financial tool. Large rescue structures are used for distressed assets or structured credit products. Company are adept at handling the issues that arise as financial products converge and thrive on the challenges this presents and by drawing the collective experience, no matter how a transaction are evolves they are deliver creative, practical, business-oriented solutions. Mayer Brown has been a leader in the creation and expansion of the global ABS market which with engaged on transatlantic projects that required multi-jurisdictional teams that few other firms can be offer and strongest securitization teams. In addition they have a pre-eminent practice in emerging markets from their well-establish transatlantic positions. Now, they have a depth of resources in these increasingly major markets where the capability to lead innovative transactions with experienced teams has never been more desperate. Amongst other innovations, they structured the world's first "diversified payment right" transaction and have structured in many similar programs that have been the 1st of their kind in their jurisdiction in 2000 for Finansbank of Turkey. The firm's unparalleled regulatory knowledge, resulting from decades of industry leadership on a range of securities, bank capital, accounting and other issues provides us with a perspective that give clients a perspective that can give clients a critical edge in creative deal structuring.
Asset- and Mortgage-backed Securities
They are consistently recognized as one of the leading law firms in ABS transactions and regularly represent the transactions such as arrangers, underwriters, credit enhancers, sellers, trustees, originators and investors.
Equally comprehensive and international in scope which includes structuring securitizations of first-lien, home-equity and subprime residential mortgages, as well as the re-securitization of mortgage-backed certificates and securitization of commercial mortgages.
Do more auto related securitizations that other firm and capably analyze and implement transactions which included auto leases.
Forefront in helping leasing companies, for their own account and to coordinate with titling trusts and securitization structures banks and other auto lesser to establish like-kind exchange programs.
IP and whole Business Securitization
Since the earliest securitizations of music catalogs such as Bowie bonds in 1997, IP and whole business securitization is a growing area and one in which they have been involved for many years.
Conduits
Represent essentially every bank sponsor in at least some of their CP conduit transactions.
Helped establish and restructure a significant number of other type of structured investment vehicles with complex capital structures.
Structured Products
Increasingly integral part of our securitization practice.
Include synthetic CDOs, equity, index, bonds, and credit linked notes involving different asset classes.
Commodities as well as related commodity derivative products to recognize for guide on structured secured.
CDOs and CLOs
Helped smaller banks and insurance companies to establish the trust preferred CDO market as a capital raising vehicle.
Needing to raise smaller amounts of hybrid capital are indispensable to smaller or regional banks and insurance companies.
Derivatives and CDOs
Complex derivatives with new generation of derivatives and structure and negotiate complex total return swaps.
Example: pay-as-you-go CDs
Allowed to become a leading player in credit-linked and equity-linked note programs which backed on the credit default and total return swaps for their synthetic components as well as synthetic and hybrid CDOs.
In a summary we can found that asset securitization has proven to be an effective means for institutions to new diverse sources of funding, centralized management and improved financial performance ratio, and effective service borrowing customers. However, there are only securitization activities. However, only securitization activities, the risk of sometimes complicated board and senior management attention. Specific assets, securities, and exposure of these, need to pay attention to the management on behalf of the assessment immediately to retain the existing restrictions on fluctuations in the interests of the relevant initial. In addition, as mentioned earlier in this statement, the agencies are studying the practice of securitization, including the various issues are to be applied restrictions, which would limit or eliminate the retained interest, and as the amount of regulatory capital. During the period, the affected agencies will review the agencies, according to a situation before the incident may need in the appropriate circumstances, the institution to hold more capital commensurate with the risk of the risk. During this period, the affected agencies will review the agencies, according to a situation before the ancient may need in the appropriate circumstances, the institution to hold more capital commensurate with the risk of risk.
Inaccurate credit ratings
Inaccurate credit ratings is the credit rating process was faulty and the high ratings given by credit rating agencies encouraged the flow of investor funds into mortgage-backed securities which are helping finance the housing boom. Now, credit rating agencies are under scrutiny for having given investment-grade ratings to CDOs and MBs which based on subprime mortgage loans. These high ratings were believed been justified because of the risk reducing practices, including credit default insurance, equity investors willing to be bear the first losses and over-collateralization. However, there are also indications that some involved in rating subprime-related securities knew at the time that the rating process was faulty. Emails exchanged between the employees of rating agencies, dated before credit markets deteriorated and put in the public suggest that some rating agency employees suspected that lax standards for rating structured credit products would result in major problems.
History of Credit Rating which has 5 stages which are secret of credit cards, credit rating calculation, credit reporting services, understanding and maintaining your good credit and rating your credit worthiness. First, secret of credit cards of this kind credit score system has been around 45 years and making lending less discriminatory and credit more widely available by credited. Efficiency of U.S. credit markets has dramatically improved of the meticulous collecting and sharing of consumers' credit histories, critics say the credit bureau's information which who insures you to who hires you will be affecting everything may increasingly being used and shared among companies without consumers' knowledge and may contain substantive errors. Secondly, credit rating calculation about how lenders decide whether you are credit worthy or not by BBC News. Thirdly, credit reporting services which are suggestions on credit checks are provided in this side. Forth, understanding and maintaining your good credit. Primary, we should understand what is a credit score, what actions can help or hurt your credit, how can u improve or maintain your credit score. This 3 question are very confusing if you want to make a smarter financial decision by average borrower and such of information is essential knowledge. Lastly is to rating credit worthiness. In offering the further rating credit was involved an evaluation of borrower's credit paying history and risk. With respect borrower financial status, credit rating is required by lenders to judge whether the borrower has the ability of repaying his debts in time.
The inaccurate credit rate will effect at disadvantages of debt consolidation. While there are many advantages to debt consolidation, we should be aware also before consolidation because most of people will ignore it. First, we must to watch out for scams and non-profit credit counseling companies but actually is for-profit companies as well as disadvantages for us. For example, DMP can provide benefits if we just ask and we can get our self from the lender for example on a student loan which in some program after a certain number of on-time payments while interest rate will be lowered a little bit. Furthermore, the greatest of inaccurate credit rate which are temptation to overspend especially during the periods of inflation. Continual overspending such as seems easy to buy today and pay tomorrow using cheapest dollars can lead to a serious trouble. The easier to occur are overspending because credit is convenient to use and some consumers fall into the trap of impulse spending rather than planned spending. By looking only minimum monthly payment and not the total amount of the debts that is also the tendency. Borrowers are liable for their debts regardless of changes that occur in the future when borrowers are using credit today commits by future income. The debt seems easy to manage earlier could become a major threat to financial security in the future when the income changes due to a job cutback or layoff, or an illness or disability. Or, living expenses are keeping increasing but income remain so that debt would be add to the drain of monthly expenditures.
Inaccurate credit rating will create a lot of real life problems, so we have to do some action to prevent and reduce the problem, there is a problem related to credit scoring, credit repair, and check your credit rating and to correct rating. In scoring and credit-related problems, is very important to score on the basis of information must be accurate based on the credit score is so important. Not exactly the problem continues to damage your credit score, so the first step, we can work with suppliers, because an inaccurate credit report information is also information from suppliers. Inaccurate personal credit report, in turn, inaccurate credit score, and denied credit with, or charge higher interest rates, in the absence of his own. Next we focus on the part of credit rating repair. If you refuse your credit rating based on credit, we can solve this problem; no one has an automatic right. Whether or not to approve the basis of the information provided, credit lenders will most of the main streets of the country's two are Experian and Equifax's leadership institutional decision right. The two compile credit payment records from the host of different sources, including the register of electors in the past the county court's decision, and how effectively past debts have. This will also add new blood, if you have a number of credit checks are exceptions - from interest-free deal to buy a freezer is open a new credit card will remain in your credit record electronic footprints. Finally, we want to check and correct credit rating. First of all, get your credit bureau reports for here you can see what is being said to you. Bad credit affects not only the credit bureau report; it can hurt employment, get an apartment and many other areas of day to day life. You need to confront problems and deal with these issues. They will not go away by themselves.
A credit rating agency is a credit rating designated by the issuer of debt instruments and debt instrument itself, and is currently under consideration for investment-grade rating given to the risk of subprime mortgage-backed securities on the basis of. These companies, state and local governments, and governmental and quasi-government entities to issue bonds in a market, subject to the scrutiny of credit rating agencies, their debt instruments can be traded in the secondary market. Credit rating agencies assign ratings to determine how to seek credibility, an example to measure the level of risk, they will be unable to repay the loan. These people believe that, because of the risk ratings Lv reduce the done are reasonable, credit Pingji have become a living part of an integral of, right Xuduo; ad Duncu We have taken loans to buy goods or services, Shipi We look forward to television, radio and newspaper. Credit rating is affected almost all organizations, regardless of whether the debt and organizational issues, while 70% of respondents rating the debt of an organization, the work of almost every tissue engineering through the use of respondent ratings from the NRSROs investment decisions.
Advantage credit rating agencies is to allow investors immediate, economic peace and easier way to identify a specific organization and the risk involved in the purchase of a specific debt instrument or the continuous development of commercial relations. In addition, the ratings using the open, such as new companies and capital markets credit rating agency can give you to an entity from an independent expert analysts, the same view.
Drawbacks of rating agencies has been subject to criticism as a result of the credit crunch, as an example, many AAA-level companies in a very short time reduced to very low levels. Credit rating agencies have also been unable to sufficiently degraded rapidly fire companies, some percentage of their company, despite the faltering company was given a relatively good ratings even been criticized for the development of the management is also closely related. Credit rating agencies have been critical of their position in the role of structured finance products, particularly in collateralized debt obligations (CDO) market, despite being the highest rating assigned to the agency a major loss.
Market Penetration of Rating Agencies among Organizations with Rated Debt
(Percentage of Respondents from Organizations with Rated Debt)
Standard & Poor's
9 6 %
Moody 's
9 3
F i t c h
3
Dominion Bond Rating Service
4
2
From the table, we found that although many organizations, the debt rating to issue bonds without a rating from a NRSRO, non-normally charge higher fees and interest rates, we can decide a number of organizations are unwilling or unable to issue no NRSROs issue debt. In 2008, most of the risk rating agencies to give proper evaluation can not be done, but some products and tools, including hedge funds, rating agencies and financial institutions basically, if not totally without control. 34% of the enterprises practitioners believe their organizations debt rating is not accurate information from the survey, but in two years ago, 29% of the respondents believe their organization's debt rating is not accurate, and This seems to show that the continued loss of confidence in the NRSROs.
People on the issuer and the issuer credit rating agencies from the natural tension often think they worth a higher rating .Let us discuss the credit rating agencies (rating agencies) of the body are often criticized as inaccurate credit ratings and the uncontrolled release of interest suspected of being explored, but the conflict is still the major rating agencies. Quality is not observing the evaluation and implementation of laws and regulations and expensive in Pagano Immordino rating agencies based on optimal scheduling. Credit rating agencies (rating agencies) play in today's financial markets a very meaningful role. The principle of credit rating should be used as potential investors and third party advice on the solvency of the debt instruments and to improve efficiency and transparency of financial market debt instruments, and should reduce information asymmetry and an issuer. The rating agency's credit rating, their sound should not be interpreted as the probability of default and credit rating, but only the views of the risks. This is a high credit rating of debt instruments means that it is unlikely to be longer by default, should take the default.
Rating agencies have been involved in several times, has been inaccurate credit rating faces severe criticism and publishing. For an example of the Asian financial crisis, where the credit rating agency in Thailand, until 5 months after the crisis and Enron, where Enron's investment grade rating agency, until the bankruptcy a few days before it starts an investment grade rating. And the behavior of rating agencies for the public discussion of the example is in the U.S. subprime mortgage collapse and its impact of global financial markets. In addition, these organizations often use the face of the suspect being exposed as a major credit rating from a rating agency to provide additional consulting services to their customers and 90% of the income to pay the debt rating agencies, instruments of the issuer is the origin of the charges of conflict of interest account. Issued by rating agencies not only to financial instruments, credit rating structure will also support the design of their investment banks. Despite these objections, these institutions themselves are still largely unregulated, but the control of the discussions on the further active in the media and in the financial market regulators. Politicians accused the European Commission and the united States are jointly responsible for the financial crisis in 2007, after the subprime crisis, rating agencies. August 2007, the Commission considered that the reaction with the laws and regulations of the credit rating agency, announced that the investigation is set by the U.S. credit rating agency's role in subprime lending crisis and the crisis. However, little progress has been made in the implementation of national laws, rules and regulations.
Highly encouraged investors to buy subprime mortgage-backed securities and funds to help his real estate boom. Rating methods and rating agencies rely on is being used to prove that many investors as the equivalent of the securitized products to improve the quality and portfolio investment, it is by the U.S. Securities and Exchange Commission cleared regulatory hurdles to be increased and its disclosure requirements, Wake reduced. Since they are by the investment banks and other companies structure and sell securities pay investors, critics argue that the loss of conflict of interest rating agencies. 3 December 2008, the United States Securities and Exchange Commission approved measures to strengthen supervision of credit rating agencies, after 10 months of investigation and found "significant weaknesses in the ratings practices", including the conflict of interest. Rating agencies lowered 1.9 trillion of mortgage backed securities from 2007 to 2008 the credit rating. Financial institutions had to lower the value of their mortgage securities and obtain additional funds to maintain the capital ratio. The value of existing shares will reduce the sale of new shares when the stock downgrades involved, thus reducing the number of financial companies stock prices.
Selling a house get much harder
Of course, we do not sell our house if we can help it. Therefore, we should check out the sales of our neighbors will see what impact the value of our house, what kind of discounts have been taken, we will shave our home today.
3
If you want to sell the house, the chart may make it hard to sleep tonight. This shows that what you are doing harm. It's ironic that this graph presented the lowest numbered short sale column in middle rather than first position (where graphs usually reflect lowest to highest). Why? Because to my mind short sales are the true in-between fix, and yet they are the most overlooked stabilizing factor in today's market first it is increasingly possible to sale them at true, demonstrated FMV (not easy but possible), thereby preventing 'cram down' of prices bargain hunters of REO purchases and/or banks desperate to get the property off of their books. Next, contrary to popular belief, it is possible to do so without the need for one to go into default just to gain the lenders cooperation. In most cases, it remains a better option than other last resorts such as foreclosure, bankruptcy or both, even with the impact of a settled debt against one's credit (which too can be avoided under the right approach). It also prevents having additional properties added to the inventory of vacant REO properties. Properties are most often in better condition as the owner still has vested interest and are 'incentivized' to put forth the best deal to gain the cooperation of buyers and banks. There is less 'blight' from unkempt and be abandoned.
http://www.mayerbrown.com/publications/article.asp?id=819&nid=6
http://www.occ.treas.gov/handbook/assetsec.pdf
http://loan-mortgage-loan.blogspot.com/2008/12/mortgage-crisis-home-loans-are-harder.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+SecondMortgageLoan+%28second+mortgage+loan%29
http://www.qfinance.com/financing-best-practice/securitization-understanding-the-risks-and-rewards?page=2
