Financial Theory (ECON 251) This lecture gives a brief history of the young field of financial theory, which began in business schools quite separate from ec…
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1. Why Finance?
Credit Securitization: how exactly does it work?
Question by Dang: Credit Securitization: how exactly does it work?
Say I have a portfolio of 100 credit card customers, what are the technical steps to securitize it? E.g. how do I do the following:
1) Data Mining
I assume the first step is some sort of database/spreadsheet (MS Excel?) with the debtors info, how does one quickly sort what slots in each tranche? Some sort of macro/algorithm?
2) Credit Rating
How does one benchmark what the risk of the tranches are? Do I simply go to Moodys and ask them to look at them and that’s it??
3) Issuance
Once we have a plan of which receivables we want in each tranche, what then? Do we go to a legal firm to issue the bonds?
Team Size Required:
How many people would I need in a small securitization team? What sort of experience would they require if we were just doing basic credit card pfolio?
Basically I am looking to set up my own niche securitization venture…I have no background in securitization though!
Thanks!
Best answer:
Answer by ADAM S
Read This : – ” Credit Card Securitization – An Overview ”
Here : – http://www.flixya.com/post/GOLDCash360/767657/
.+.
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Olympic Park Finance infographic
Check out these Finance images:
Olympic Park Finance infographic
Image by The Department for Culture, Media and Sport
We have created an infographic which shows facts and figures about the finance behind the Olympic Park, and some of the benefits that the build of the Park have brought to the local community.
We have released the infographic under a Creative Commons licence for use by news and online media.
Further information: goc2012.culture.gov.uk/themes/finance/
Sustainable capitalism: Social finance
Image by mars_discovery_district
Speaker Tamzin Ractliffe (SASIX) presented "From Classic Capitalism to Social Finance GSIX | A Global Social Investment Exchange" at the Social Entrepreneurship Summit at MaRS, 17th November 2008.
Now, Sir Ronald Cohen, founder of Apax Partners, addresses students at the Harvard Business School, saying that social finance is the next big thing in business (big news from the “father of private equity”!).
Read more: www.marsdd.com/blog/2010/07/15/sir-ronald-cohen-on-social…
Q&A: Question about Loan Securitization?
Question by Scott45: Question about Loan Securitization?
Company ABC is looking to refinance a 75 million securitized loan on an office building in NY. Is this basically just saying the loan has been sectioned off in different tranches and was sold to investors via CMBS. Can someone give me alittle insight on the securitization process how and why it happens and who all does it.Also take the above example and say they can’t find the cash for the refi.. How would that effect the cmbs security they bought if one of the properties within goes in default
Best answer:
Answer by ronwizfr
Suppose you are a mortgage company. You have $ 1 million in capital, loaned out to 10 customers at 8% interest rate over 30 years. Obviously you are going to get your money back, either in payments or in foreclosed houses but it´s going to take a while. So in order to have the million back today you sell them to some other investors. Obviously you have to give up some of your future profits for cash now.
You could sell those 10 loans to 10 investors. Each investor would be taking a risk in buying those loans, because if any loan defaults, that one investor loses his money. Naturally, investors would not be willing to pay very much for those loans, knowing the risk involved. In order to get a better price, you combine the 10 loans into one special purpose entity, which you then split into 10 equal shares. Each investor still pays the same $ 100,000+x, but instead of owning one loan, they will own 10% of all 10 loans. If one loan fails, every investor loses only 10%.
And you can do even better, by buying credit derivatives insuring against the default or inflation and adding them to the entity.
The result is that you will be able to sell the loan assets for more money, and investors are insulated from the volatility of directly owning mortgages.
Give your answer to this question below!
SPE’s for securitization?
Question by Johnny Question: SPE’s for securitization?
How do investors look at SPEs for the purpose of securitization of receivables? Should they be skeptical?
Best answer:
Answer by JoeyV
I’ll assume that you are in the US as I have no idea how this works in some other random country. I also assume that you mean the investor in the originating company, not an investor in a security based on the receivables.
In the US, the sale of receivables to the SPE must be a “true sale” pursuant to FASB 125. The rules on this are pretty strict and, unless there is reason to suspect the company is pretty dirty, I would generally regard it that way. This is significantly better than some off-balance sheet transfer that represents securitized lending and is some way of hiding debt.
I know this sort-of smells like Enron’s SPV’s or something, but I believe that most securitized receivables are just replacing traditional financing of receivables by a cheaper alternative and one that cleans up the balance sheet. Would you prefer that a company borrow short-term money by floating commercial paper, for instance, or securitizing their receivables? In the former instance, they have debt on the books that is probably higher on the capital pecking order than your investment and in the latter they have cash. Since the SPE is “bankruptcy-remote”, the securities issued by the SPE are likely to be more highly rated than the commercial paper so the cost to the company is probably less.
Skepticism is always good, but I think that you can be skeptically optimistic about this.
Know better? Leave your own answer in the comments!
Most popular Finance auctions
Finance eBay auctions you should keep an eye on:
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How can you avoid foreclosure with audits securitization
Nobody wants to lose the house that not only stores all the goods, but all the memories. In many cases, this home is the place where they saw their children grow up, so it has become more than a house – it’s a house. Nothing is more heartbreaking than being in the position of having led by banks, because you are unable to continue to pay your debts.
Once taken, it is unlikely that you will ever get, so in order to avoid something like this to happen, Securitization audits are the way to go. An audit of securitization defends your property and he discovers his securitization. Through securitization audit, you can know whether or not there were signatures of fraudulent documents or if there are irregularities in the loan.
Using a securitization audit, you have increased the chances of winning your case. The verification process shows the status of the trustee and the holders of certificates, more precisely, if they still have the rights to continue with the closure. Audits securitization has changed a lot in recent years, more and more accessible not only to professionals but also for the average homeowner. In the past, these types of loans were supported by correspondent lenders, but now all the information regarding the participants and parties involved in the loan is included in an audit report.
An audit report securitization offers a big help, whether you need to modify your loan reports or use in the courts.
However, the use of the courts, with the exception of the documentation, you also need an affidavit. The report includes a detailed analysis regarding the privilege profile, a report on the complete profile of the property, information on the assessment of the tax, the complete data of mortgage transactions and cases extends to just to name a few services provided by securitization audits.While taking care of an audit of securitization is not rocket science, professional who offer advice is recommended. It is always useful to not be alone when it comes to verification of important documents, such as signatures and certificates. In addition, the report contains a summary indicating the losses the lender or bank will have to face if they want to continue the process of foreclosure.
Do not let the banks take away from you your most valuable asset. Remember that even banks can make you give up the fight, leaving you believe you have lost everything, when in fact, you can always put up a fight and possibly win your case by audits securitization!
If you want to know more about check securitization do not hesitate to visit Audits securitization .
securitization articles verification
Econ: Securitization?
Question by Zoey Hockey: Econ: Securitization?
What role did securitization play in the recession.
Best answer:
Answer by Jim G
Secularization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling said consolidated debt as bonds, pass-through securities, or Collateralized mortgage obligation (CMOs), to various investors. The principal and interest on the debt, underlying the security, is paid back to the various investors regularly. Securities backed by mortgage receivables are called mortgage-backed securities (MBS), while those backed by other types of receivables are asset-backed securities (ABS).
This is highly risky for all your available money to be tied up in times like this recession.
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How do mortgage backed securities work?
Question by mercymercy: How do mortgage backed securities work?
Best answer:
Answer by Net Advisor
“Mortgage-backed securities (MBS) are debt obligations that represent claims to the cash flows from pools of mortgage loans, most commonly on residential property.”
They are purchased from banks, mortgage companies, and other originators and then assembled into pools by a governmental, quasi-governmental, or private entity. A company sells securities (bonds) that are backed by principal and interest payments made by people who make payments on home loans. This process is called, “securitization.”
In the event of default, the bond holders lose money. Too many people assumed factors that would never happen.
1. Real estate prices could never fall.
2. Interest rates won’t go up.
Result (in short). During 2004-2006, The FED raised the Fed Funds Rate 425%. The result caused a massive credit squeeze where people with adjustable and higher risk mortgages began defaulting. The result created foreclosures, and this began to feed on itself.
Know better? Leave your own answer in the comments!
What advancement in technology made capitalism possible? And what will the elimination of capitalism therefore?
Question by Lodar of the Hill People: What advancement in technology made capitalism possible? And what will the elimination of capitalism therefore?
result in as far as human progress?
Best answer:
Answer by W.C. Felcher
Private ownership of fee simple absolute property, legal enforcement of contract rights, and the securitization of loans.
Give your answer to this question below!
What are the job functions of a corporate banker? Risk assessement? Treasury?
Question by Future Trader?: What are the job functions of a corporate banker? Risk assessement? Treasury?
I am a fresh graduate and now deciding whether to join the financial service sector or research firm, so just need some info on corporate banking. Please be specific like describing the divisions and job functions and responsibilities. Thanks a lot for the help, whoever you are. My future depends on it!
Best answer:
Answer by blue.financer
-Sector profile
http://news.efinancialcareers.com/SECTOR_PROFILE_ITEM/newsItemId-5499
-Analysts usually start off with credit analysis. This involves looking over balance sheets and determining whether the client will follow through with paying back. Specifically, you’re looking at coverage and leverage ratios and measuring the likelihood of default.
Corporate bankers typically focus on the securitization process (that involves alot of assets and divides them up into tradable shares) and the issuance of large loans. Such can be used for project finance. Among other things, you’ll have exposure to hedging against foreign exchange risk and managing international systems of payment.
Treasury Management (from London School of Economics):
“To plan, organise and control cash and borrowings so as to optimise interest and currency flows, and minimise the cost of funds. Also to plan and execute communications programmes to enhance investors confidence in the firm.”
Add your own answer in the comments!
Q&A: How to punish Hank Paulson if it comes out that he is personally involved in the Madoff-scandal?
Question by johann_mb: How to punish Hank Paulson if it comes out that he is personally involved in the Madoff-scandal?
Best answer:
Answer by Mary Ann
Treasury Secretary Henry Paulson sold the $ 700 billion financial bailout to Congress by insisting that emergency cash was needed to get rotting mortgage and other assets off banks’ balance sheets. Now he’s telling a different story!
He now announced plans to use the bailout cash for a distinctly different approach to resolving the financial mess: injecting additional capital into banks (potentially expanding the initiative to include non-bank financial institutions), supporting the asset-backed securitization market, and looking at ways to prevent foreclosures.
Hank Paulson should be sentenced to five-years/50 hrs a week of Community Service in various area such as foreclosure assistance, homeless shelters, food banks, food kitchens for the poor, meals on wheels to see the fear in those who have lost their investments and now have nothing to eat, etc. No amount of money will hurt him as much as the souls of those who are now suffering.
Give your answer to this question below!
what does securitization of mortgage debts mean?
Question by No88oN: what does securitization of mortgage debts mean?
please try to explain as much as possible
Thanks
Best answer:
Answer by the tax lady
It’s a fancy phrase for the bank that makes the loan bundling one loan with a 1000 others and selling them as a type of security. The problem was, the banks promised the securities were AAA rates when they should have had a grade of F-. One well known issue paid just 6 cents on the dollar after the market failed.
Search on npr and giant pool of money and listen to the award winning shows on this topic.
What do you think? Answer below!
Q&A: I need help finding a company that still offerst student loans.?
Question by Ana: I need help finding a company that still offerst student loans.?
Financial aid didn’t cover my whole tuition and books.
I need help finding a comapany that still offers student loans.
Any suggestions?
Best answer:
Answer by NotAnyoneYouKnow
The news on this front might be improving. Don’t take this as a personal recommendation (one way or the other) about Sallie Mae, but here’s an excerpt from an article that just appeared in the Washington Post this past week:
“Sallie Mae Raises $ 1.5 Billion for Private Loans
Reston-based Sallie Mae has secured $ 1.5 billion worth of financing from investment bank Goldman Sachs for a batch of private student loans, a sign that credit for the frozen student loan markets may be beginning to thaw.
The deal is the first transaction to provide funding for the private student loan market since September 2007, other than a relatively small securitization of $ 124 million, which was sold by the private lender MyRichUncle on July 10, 2008, according to Mark Kantrowitz, the publisher of FinAid.org.
“That’s significant, as a first sign of a thawing of the capital markets,” Kantrowitz said.”
On the other hand – if you’re looking for a list of lenders that are no longer making student loans – you can find that list here:
http://www.nasfaa.org/publications/2008/rsuspensions030408.html
You’ll find a few well-known names there, lenders like Bank of America, Comerica, GMAC, My Rich Uncle, Next Student, and the now-departed Wachovia and Washington Mutual.
Your best bet is to check with the financial aid office at your school – that’s part of what the financial aid officers are paid to keep track of (who’s still making loans available to their students). Another important option is to contact whichever banking institution you (or your parents) have had a long-term relationship with – especially if that institution is a credit union or a regional bank. Some lenders have limited the availability of educational loans strictly to loyal customers, and they’re no longer advertising these products to the general public.
All of that being said, you’re in a for struggle, as you already know. Educational loans are high-risk loan products, and these are exactly the types of loans that nearly every bank is trying to avoid.
Good luck to you.
Know better? Leave your own answer in the comments!
Overview of Securitization?
Question by Louie: Overview of Securitization?
I’m starting a job in the finance department of a law firm in the fall, and I’ll be working primarily in securitization. I don’t know exactly what it is (which they say isn’t a problem), but I’d like to get a general overview before I start. Any recommended “primers” or hornbook-type sources to check out?
Best answer:
Answer by Eggolas M
A Primer on Securitization (Paperback)
by Leon T. Kendall (Editor), Michael J. Fishman
It’s fine coming out of law school not to know the basics of securitization. The law firm will begin your training soon enough.
What do you think? Answer below!
how debentures influence money supply in an economy?
Question by alexis: how debentures influence money supply in an economy?
can you tell me how it influences money supply. i have no clue how .
Best answer:
Answer by sajan achuthan pillai
A debenture is defined as a certificate of acceptance of loans which is given under the company’s stamp and carries an undertaking that the debenture holder will get a fixed return (fixed on the basis of interest rates) and the principal amount whenever the debenture matures.
In finance, a debenture is a long-term debt instrument used by governments and large companies to obtain funds. It is defined as “a debt secured only by the debtor’s earning power, not by a lien on any specific asset.” It is similar to a bond except the securitization conditions are different. A debenture is usually unsecured in the sense that there are no liens or pledges on specific assets. It is, however, secured by all properties not otherwise pledged. In the case of bankruptcy debenture holders are considered general creditors.
The advantage of debentures to the issuer is they leave specific assets burden free, and thereby leave them open for subsequent financing.Debentures are generally freely transferrable by the debenture holder. Debenture holders have no voting rights and the interest given to them is a charge against profit.
What do you think? Answer below!
Valley Auto Loans Releases New Blog Post that Advises on High Risk Auto Loans
(PRWEB) May 25, 2013
Valley Auto Loans is the number one auto loan provider available. Their services have approved hundreds of auto loans that were rejected by other lenders due to bad credit. They now specialize in 100% approvals for all of their applicants, and this impressive rate of approval is grabbing the attention of everyone struggling with bad credit.
To apply for an auto loan today visit https://valleyautoloan.com/apply-now2/
Recently Valley Auto Loans released several new posts in their blog, which advise clients on matters from picking a new car all the way to finding better car insurance. Their most recent addition is an article titled High Risk Auto Loans Advice. It is a very interesting and useful collection of information that is essential to anyone seeking a high-risk auto loan due to a damaged driving history.
Valley Auto Loans auto loans has many useful and essential tools for any financial situation, but their main service is their auto loans. Anyone at all who applies at Valley Auto Loans will be approved for a great auto loan. Low rates, great maximums, and no hidden fees are all available from an application that can be completed in less than a minute. So anyone in need of a new, reliable vehicle, but who is struggling with bad credit scores can find exactly what they need at Valley Auto Loans.
About Valley Auto Loans
http://valleyautoloan.com/ is the leading auto and cars finance provider in USA, Canada & UK fully dedicated to help its customers acquire national car and auto financing. They design and develop customized no credit auto and car financing, bad and good credit auto and car loans. Voted the best for “Quality Customer Service; Best National Auto Loans Service” by thousands of people, their finance experts focus in providing its customers information and various tools available for different auto loan offers, help them to choose the best that fits their budget as well as the related eligibility guidelines in detail.
How come poverty is at an all time high and income is down sharply?
Question by Average College Idiot: How come poverty is at an all time high and income is down sharply?
Best answer:
Answer by Hamoud
Don’t look at me. We are only 1% of the popualtion.
Add your own answer in the comments!
Securitization Audit example clips
http://azsolutionexperts.com/audit_examples.php NOTE= debt, I prommis to pay to “name”, this monthly $ , on this date of each month, starting on this day mont…
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Mortgage chain of assignments and forensic audits – http://www.titlesearch.com/
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how do you sell short student debt loans ?
Question by John K: how do you sell short student debt loans ?
how do you sell short student debt loans ? just like other debt instruments ?
Best answer:
Answer by Peilthetraveler
Sell short sallie maes stock. Ticker symbol SLM.
Give your answer to this question below!
