Fixing the Sub-Prime Market - Hudson Institute – Security 固定次贷市场-哈德森研究所的–安全.pptVIP

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2018-06-24 发布于四川
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Fixing the Sub-Prime Market - Hudson Institute – Security 固定次贷市场-哈德森研究所的–安全.ppt

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Fixing the Sub-Prime Market - Hudson Institute – Security 固定次贷市场-哈德森研究所的–安全

Fixing the Sub-Prime Market Jack Guttentag October 24, 2007 Sub-Prime Balance Sheet Assets Expand home ownership in US Liabilities Overcharges Prime borrowers caught in net Opportunistic pricing Fee-packing to payment-myopic borrowers Lax underwriting High foreclosure rate Default spikes are contagious An enormous negative externality Net Worth to Society - Negative Objectives of Reform Eliminate Contagious Credit Shocks to Investors Eliminate Sloppy Underwriting Make the Market Work For Borrowers Eliminate ability to catch prime borrowers Reduce opportunistic pricing and fee-packing Make it easier for borrowers to shop Definition of Sub-Prime Mortgage-Backed Security (SPMBS) Sub-Prime Mortgage-Backed Security A security collateralized by a mortgage pool having any one of these features: More than 1/3 of loans have FICO scores 640 More than 1/4 of loans are cash-out refinances More than 1/3 have debt-to-income ratios 40% More than 1/2 of ARMs have gross margins 5% Sub-Prime Mortgage A mortgage in a sub-prime collateral pool Qualifying and Non-Qualifying SPMBS Qualifying SPMBS Requires That: Borrowers are certified as “sub-prime” All loans carry cash flow insurance (CFI) Lenders follow transparent pricing rules Qualifying SPMBS Receive GNMA Insurance All Other SPMBS Are Non-Qualifying These SPMBS must be sold privately Requirement of Borrower Certification Borrower Doesn’t Meet Conforming, FHA, VA or Alt-A Underwriting Requirements Evidenced by certification from authorized mortgage counselor Authorized mortgage counselor has been trained in, and passed a competency test in using automated underwriting systems Eliminates prime borrowers caught in sub-prime net Requirement For Cash Flow Insurance on Each Loan Each Loan Must Carry Cash Flow Insurance (CFI) From AA or AAA-Rated PMI Guarantees that payment on loan will be received within (25) days of the due date. Guarantee effective at securitization CFI is first line of defense protecting GNMA Removes cred