An Overview of Mortgages and the Mortgage Market推荐.pdf

CHAPTER TWENTY-TWO AN OVERVIEW OF MORTGAGES AND THE MORTGAGE MARKET ANAND K. BHATTACHARYA , PH .D. Managing Director Countrywide Securities Corporation WILLIAM S. BERLINER Senior Vice President Countrywide Securities Corporation As a corollary of the American dream of home ownership, the mortgage market in the United States has emerged over the last decade as one of the largest asset classes. As of the fourth quarter of 2003, the total face value of one- to four-family residential mortgage debt outstanding was approximately $7.3 trillion, with roughly $4.2 trillion having been securitized into a variety of investment vehicles. As a point of comparison, at the same point in time, the outstanding amount of U.S. Treasury notes and bonds totaled $3.7 trillion. For a variety of reasons, such as product innovation, technological advancement, and demographic and cultural changes, the composition of the primary mortgage market continues to evolve on a fairly dynamic basis. The mortgage-lending paradigm continues to be refined in ways that have led to lenders offering a large variety of products designed to appeal to consumer needs and tastes. This evolution has been facilitated by atten- dant increased sophistication in pricing that has allowed for the quantification of the risks inherent in such loans. The purpose of this chapter is to define the vari- ous products originated