Securitization practices is a securitization of housing loans for people with poor credit-not the loans themselves of the reason behind the current global credit crisis. Due to securitization, investor interest for mortgage backed securities (MBS) and the tendency of rating agencies to assign investment-grade of ratings to MBS, packaged and the risk readily transferred to others and the loans with a high risk of acquiescence could be originated. In the traditional mortgage model of subprime crisis was involved a bank loan to the homeowner or borrower and retaining the credit risk. Meaning of securitization mortgages being issuing were no longer required to hold them to maturity but the securitization practices in crystallization of the crisis also could resulted leaders were no more required to hold them to maturity in a secondary market for subprime crisis. The traditional model has given way to be "originate to distribute" model with the coming of securitization in which bank can through mortgage-backed securities essentially sell the mortgage and distribute credit risk to investor. In this kind of situation will created a moral hazard in which an increased focus on processing mortgage transactions was incentivized.
Securitization which included mortgage backed securities is accelerated in the mid-1990s but the total amount of mortgage-backed securities issued almost tripled between 1996 till 2007, to $.7.3 trillion. From the MBS at can found that the securitized share of subprime mortgage was increased around 21% which from 54% in 2001 to 75% in 2006. The credit risk in sub-prime mortgage was through the securitization mechanism and with a wide arena of investor globally and the impact of the credit crisis is felt on a global level was got passed on to other investor .In 2008 American homeowners, corporations and consumers were owed roughly around $25 trillion while American banks retained about $8 trillion of that total directly as traditional mortgage loans and the remaining of $10 trillion was came from the securitization market. The securitization markets were starts to close down in the spring of 2007 and in the fall of 2008 shut-down. But in the February 2009, Ben Bernanke stated that securitization markets remained effectively shut with the exception of conforming mortgage.
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 broad terms in the capital market, securitization can be viewed as pooling receivables and selling claims to the receivables. As an example, a mortgage lender may sell claims on mortgage receivables to investors by pool together of mortgages. Historically, in United States the first securitizations in the 1970s were those pools of mortgages. Auto loan receivables, credit card receivables and home equity receivables must be securitized to success of mortgage-backed of securities.
Although majority of securitizations are receivables on consumer debt, in principle, any cash flow of receivable we can assume that can potentially be securitized. Securitized mutual fund fees, movie revenue, tobacco settlement fees, and even music royalties is also called as "exotic" securitization. Furthermore, student loans, equipment leases, commercial mortgages even manufactured housing loans are also considered securitized.
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
Differential risks of these securities may change over the life of the securities may change over the life in the whole securities. As an example, credit risk for issued securities were depends on the performance of the underlying collateral pool and on credit enhancements and must be varying over time. A lender's underwriting criteria (such as credit score of the borrower, credit history, down payment, loan-to-value ratio, and debt service coverage ratio), economic variables (such as unemployment, economic slowdown, and bankruptcies), and loan seasoning (payment patterns over the age of loans)which are the important factors affecting pool performance. By using credit enhancement will also effects credit risk by providing more or less protection to promised cash flows for a security. An additional protection of securities can help a security to achieve a higher credit rating, to create new securities with differently desired risks by lower protection and lastly is the differential protections to place a security on the attractive terms. "early amortization" event can be trigger by violation of credit enhancement also which by starts prepayments on securities with using a available SPE resources.
In the particular, bond rating agencies assign a credit rating to each security issued by the SPE and they will evaluate the rating in periodically. Therefore, the pool performance evaluation, security cash flow allocation and servicing of receivables will be continue on an ongoing basis. Furthermore, periodic financial reports are filed with regulatory agencies by the publicly issued securities and originator of receivables are typically continue to service the receivables (i.e., manage delinquent accounts and collect payment on the receivable) for the fee.
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
The unique characteristics of securitization are creating additional risk also although they are capable of providing benefits. When repayment behavior is significant worse than expected so that investors may be concerned about the moral hazard; that is, receivables in the collateral pool were "cherry-picked", and investors may required additional support for the securitization. This is the example of produce unintended consequences when standard cash flow risks are combined with the separation of funding of receivables from their origination and servicing. From the collateral of the originator's balance sheet had recognizing poorly performing assets jeopardizes the originator's financial condition and such actions will be resisted by the originator's stockholder and bondholders to require the originator to provide an explicit guarantee or to take back poorly performing collateral. Similarly, the creditors might consider going after assets that are securitized and off the originator's balance sheet when the originator's is in a poor financial condition to make sure decrease their risk. This action can jeopardize investor claims on the collateral pool and question the legitimacy of the bankruptcy-remoteness of the SPE. Furthermore, a narrow focus on originator can create an incentive to over-originate loans to marginally less creditworthy borrowers.
From the more complex the structure, the greater is lack of transparency and the harder to analyze and forecast security performance of the securitization practice. For an example, if long-term securities collateralized by short-term credit card receivable, it's of course exposed to amortization risk due to a mismatch between cash flow receipts on the receivables and cash flow payments on the securitization. Because of the recently issue of securitization practice which come from their issue had come with greater uncertainly about their performance by add third-party insurance, and subprime credit card receivables. Moreover, the riskiness of securities based on such structural transformations depends in a complex manner on many factors and a reliable evaluation will be obtained will effect that may be hard to obtain.
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
In the Securitization Practices a world leading source in every market and every class of authoritative, independent news and analysis on the issuance of, and investment in, asset-backed and mortgage-backed securities. 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.
http://www.mayerbrown.com/publications/article.asp?id=819&nid=6
http://www.occ.treas.gov/handbook/assetsec.pdf
http://www.qfinance.com/financing-best-practice/securitization-understanding-the-risks-and-rewards?page=2
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 problems in the real life so we must do some actions to prevent and minimize the problems which are problems associated with credit scoring, repairing your credit rating and checking and correcting credit rating. In the problems associated with credit scoring, it is imperative that the scores be based on accurate information based on credit scores are so important on it. Inaccuracies problems continue to hurt individuals' credit scores so that in the first step we can cooperate with information suppliers because credit report inaccuracies also come from information suppliers. Individuals with inaccurate credit reports will in turn to inaccurate credit scores and with the denied credit, or charged higher interest rates, at no fault of their own. Next let focus in the repairing the credit rating part. You can tackle the problem that no one has an automatic right to credit, but if you are refused on the basis of your credit rating. Most high street lenders will make a decision on whether or not to grant you credit on the basis of information supplied by the country's two leading agencies - Experian and Equifax. These two compile credit histories from a host of different sources, including the electoral roll, past county court judgments and how effectively past debts have been paid. It will also be flagged up if you have had an abnormal number of credit checks carried out - everything from buying a freezer on an interest-free deal to opening a new credit card will leave electronic footprints in your credit history. Lastly we should checking and correction the credit ratings. Start here by obtaining your credit bureau report so you can see exactly what is being said about you. A bad credit bureau report not only affects credit, it can hurt employment, getting an apartment and many other areas of day to day life. You need to face up to your problems and deal with them. They will not go away by themselves.
A credit rating agency which is a company that assigns the credit ratings to issuers of debt instruments and to debt instruments by themselves and are now under scrutiny for having given investment-grade ratings to MBSs based on risky subprime mortgage loans. The companies, national, and local governments, and government and semi-government entities to issue debt in the primary market and thus come under the scrutiny of the credit rating agencies, their debt instruments can be traded on a secondary market. Credit rating agencies assign ratings that seek to determine how creditworthy the issues which an example to gauge the level of risk that they will be unable to repay the loan. These ratings were believed justified because of risk reducing practices; credit rating has become part and parcel of life for many; adverts urge us to take out loans to buy goods or services whether we look on television, radio or in the newspaper. Credit ratings was affect nearly all organization regardless of whether an organization issues debt and while 70% of the survey respondents work for an organization that rated debt and nearly every respondent works for an organization make the investment decision by using ratings from NRSROs.
The advantages of credit rating agencies is to allow investors to quickly, cheaply, and conveniently identify the risk involved in buying a particular debt instrument or in developing in a business relationship with a particular organization. Besides that, the use of ratings opens capital markets to entities such as new companies and credit ratings also can give you an insight into an entity from an independent expert analyst.
The disadvantages of the rating agencies have come under critics as a result of the credit crunch, as example, within a very short space of time, many AAA-rated companies were downgraded to very low levels. Credit rating agencies also have come under fire for failing to downgrade companies quickly enough, with some companies faltering despite being assigned relatively good ratings even have been criticized for developing too close a relationship with the management of the companies that they rate. Credit rating agencies have been criticized for their role in rating structured finance products, and in particular for large losses in the collateralized debt obligation (CDO) market that occurred despite being assigned top ratings by the agencies.
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 while many organizations are able to issue debt without a rating from an NRSRO, non-rated debt is typically charge the higher fees and interest rates and we can make a decision about many organization are reluctant to issue or unable to issue debt without an NRSROs. In 2008, most of the risk rating agencies were unable to give proper ratings to complete instruments but several products and financial institutions which include hedge funds, and rating agencies are largely if not completely unregulated.
34% of corporate practitioners was believe that the ratings on their organization's debt are inaccurate which from the information from the survey but at two years earlier had 29% of respondents believe the ratings of their organization's debt are inaccurate while this seems to indicate a continued loss of confidence in the NRSROs. There is a natural tension about the issuers and credit rating agencies since issuers often believe that they should deserve a higher rating than granted.
Let's discuss about the Credit rating agencies (CRAs) which the agencies are very often have been criticized for announce inaccurate credit ratings and are suspected of being explored to conflicts of interest but CRAs still remained largely unregulated. Rating quality is unobservable and enforcing regulations are costly which based on the Pagano & Immordino of the optimal regulation of CRAs. Credit rating agencies (CRAs) play a very meaningful role in today's financial markets. In principle, credit ratings should serve as third-party opinions about the solvency of a debt instrument and improve efficiency and transparency in financial market and should reduce the information asymmetry between an issuer of a debt instrument and the potential investors. The CRAs pronounce that their credit ratings should not be interpreted as default probabilities and that credit ratings are rather opinions about risk only. The higher is the credit rating of a debt instrument means that the less likely it should be to default and the longer it should take to default.
CRAs have been involved in several times and have been confronted with heavy criticism for publishing inaccurate credit ratings. For an examples are the Asian crisis, where the CRAs gave Thailand an investment-grade rating until 5 months after the start of the crisis or the Enron case, where the CRAs gave Enron investment-grade until days before it went bankrupt. And an example for public discussion about the behavior of CRAs is the debacle of subprime lending in the USA with its impact on financial markets globally. Furthermore, CRAs are often use in confronted with the suspicion of being exposed to conflict of interest as mostly the issuers of the debt instrument pay for the credit rating which CRAs offer additional consulting services to their clients and 90% of CRAs revenues is come from the fees account. The CRAs not only issued credit ratings for structured finance instruments, but also supported investment banks in designing them. Despite these objections, CRAs remained themselves largely unregulated, but the discussion on further regulation is active in the media as well as in institutions of financial market supervision. The EU-commission and US politicians blamed the CRAs of being jointly responsible for the financial crisis after the subprime loan crisis in 2007. In August 2007, the EU- commission considered reacting with legal regulations for the credit rating agencies and also US authorities announced to investigate the role of CRAs in the subprime loan crisis that was set. However, very little progress has been made in implementing those proposals in national laws and regulations.
High ratings encouraged investors to buy securities backed by subprime mortgages and helping finance he housing boom. The way ratings and reliance on agency ratings were been used to justify investments led many investors to treat securitized product as equivalent to higher quality securities and it was exacerbated by the SEC's removal of regulatory barriers and it had reduced of disclosure requirements in the wake. As they were paid by investment banks and other firms that organize and sell structured securities to investors, critics will allege that the rating agencies suffered from conflicts of interest. On 3 December 2008, the SEC approved measures to strengthen oversight of credit rating agencies, following a ten-month investigation that found "significant weaknesses in ratings practices," including conflicts of interest. Rating agencies lowered the credit ratings on $1.9 trillion in mortgage backed securities between 2007 and 2008. Financial institutions felt they had to lower the value of their MBS and acquire additional capital so as to maintain capital ratios. The value of the existing shares will reduces when involved the sale of new shares of stock and thus ratings downgrades lowered the stock prices of many financial firms.
Selling a house get much harder
For sure, we won't to sell our house now if we can help it. So, we should checked out the comps in our neighborhood to see what kind of hit our house's value has taken and what kind of discount we'll be shaving off our home today.
From the 4 seasons compared, we can found that selling a house in summer and winter has never been the best time to sell a house.
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
