1
AlbinoRodriguez said at 12:02 pm on January 12th, 2010:
But how if the SPE is formed 100% from money of the investors. Where did you get that officers hold 51% of the stock authorized? I am interested in learning more about it.
2
occidental88 said at 1:01 pm on January 12th, 2010:
I believe that the SPE still maintains ownership of the loan rights because the officers collectively still hold more than 51% of the stock authorized. This is why today we are seeing investment banks that are losing tons of cash through these deals that were top-heavy a few years ago in the housing market. Investors obviously have gone through huge dividend cuts so everyone really loses.
3
MrMortgage1 said at 1:42 pm on January 12th, 2010:
mortgageartist. com
The best thing you can do is arm yourself with knowledge, even better if it’s free. a little time and a few clicks now could save you years and thousands of dollars later.
the choices you make today define your tommorow.
4
pagalmadman1 said at 2:07 pm on January 12th, 2010:
“i don’t know” – takia kalaam of sal
5
AlbinoRodriguez said at 2:31 pm on January 12th, 2010:
My question is, who owns my loan?
original bank got paid from investment bank.
Investment Bank got paid thru the MBS or investors.
If i default, who has the legal right to foreclose? If the investement bank already got paid?
6
DaBrit3 said at 3:08 pm on January 12th, 2010:
Just a thought: maybe some of the people watching these vids are a little too advanced in their knowledge of the subject. These vids are for novices, like myself. Thanks for all you do, Sal.
7
DaBrit3 said at 3:19 pm on January 12th, 2010:
Paulremote, I was thinking the same thing about the $2Billion going to the SPE.
8
pjblabla said at 3:45 pm on January 12th, 2010:
I would like to ask a question
when a regular bank gives out $1 billion worth of loans it uses fractional reserve banking rules to bring new money into existence – right?
is it that when an investment bank buys these mortgages and sells them further – then existing money (i.e. savings) gets used.
Now, that most of these mortgage backed securities have gone to dirt – so is it that existing money (i.e. money that is no longer debt) got destroyed?
any responses are welcome
9
hakker2002 said at 4:39 pm on January 12th, 2010:
lol that is why we r in this financial crisis all thx to ABS, MBS, CDO and Credit difoult swaps CDS, do not learn this or i will be very conserned in US banking system in the future
10
pcuimac said at 5:13 pm on January 12th, 2010:
They create giromoney in an account not “real” money. Most of the money today is only a number on a computer harddisk.
11
asierra1492 said at 5:18 pm on January 12th, 2010:
Public Sector debt is 13 trillion
Private Sector debt is 38 trillion.
12
apeytube said at 6:05 pm on January 12th, 2010:
Is it because of the 50% recovery rate? 20M of 100M default but 10M is recoverable, so total 10M loss?
13
paulremote said at 6:13 pm on January 12th, 2010:
My question: In the case where 20% borrower default, there seems to be a 15% loss in Total, why do you mention only a 10% loss?
14
paulremote said at 6:57 pm on January 12th, 2010:
Ideally, borrowers pay 10% per year over 10 years and pay back the total amount at the end. The investment bank receives $2Billion from borrowers.
If 20% default, with the 50% recovery on their properties.
The investment bank will get
$100m from the recovery
$800m from end pay-back
Year : 1 2 3 …. 9 10
Interest $: 80m 80m 80m 80m 80m
That is $800m over 10 years + $800m from the total properties + $100 from the recovery, that makes $1.7Billion, 15%loss??
15
futureeconomist said at 7:03 pm on January 12th, 2010:
In response to bubkboss1:
Believe it or not, $4.2 trillion of the debt is actually owed to the federal government itself. That means it’s owed to gov’t agencies such as the Federal Reserve and Social Security. This kind of debt, ARGUABLY, doesn’t have to be repaid. (Kinda like you paying back yourself).
Secondly, most of the remaining $6.8 trillion is owed to domestic American citizens/corporations. The gov’t owes China $1 trillion, which, comparatively isn’t bad as saying “China owns us.”
16
futureeconomist said at 7:03 pm on January 12th, 2010:
The notion that the Treasury Department is printing billions of dollars in money is completely FALSE. Just because the media shows money being printed anytime they cover financial news DOESN’T mean the Treasury prints money on a daily basis.
It is imperative you know that the Federal Reserve actually SHREDS $400 million dollars in a SINGLE DAY. Trust me, I have personally been to the Federal Reserve bank and seen $100 notes and $1 notes being shredded and removed from the circulation constan
17
Melville10 said at 7:37 pm on January 12th, 2010:
I’m reading When Giants Fall by Michael Panzner. What you are discussing, according to Panzner, is a distinct possibility. Panzner cites that many countries are moving on financially because they have reached the point that America is no longer important to their wealth (e.g. Russia doing deals with Iran and China and omitting the U.S.) Panzner’s 2007 book, Financial Armageddon, is frightening in that what he talks about in 07 is happening now.
18
jerry3238 said at 7:47 pm on January 12th, 2010:
Terrific
19
dpod916 said at 8:26 pm on January 12th, 2010:
our currency used to be backed by gold, now it is backed by government treasuries which are basically bonds that the government is obliged to honor, and yes alot of foreign countries own these mainly china. and to you second question if they no longer wish to purchase our treasuries which could very well happen very soon because of our printing billions due to bailouts then we would have a currency collapse and hyper inflation as seen in germany in the 1930s.
20
buckboss1 said at 9:04 pm on January 12th, 2010:
Very good stuff. Made easy enough for the common guy to understand. I looked at your other videos but did not see one explaining how our country gets into debt. If we have 13 Trillion as a country in debt, who do we owe? Do we print money or do we issue bonds? What if foreign countries don’t want to buy our bonds?
21
Furiouz7 said at 9:59 pm on January 12th, 2010:
thanks
22
kggoh said at 10:24 pm on January 12th, 2010:
Now, not only the default make the problem worst, the asset(house) value went down, eg. 20% of 1b defaulted = 200m worth of asset, the owner r not able to make payment, the bank took their asset and put in on auction, guess what, if the asset value now drop to just 50%, the bank can only recover 100m, ie, it loses not only the interest of 200mx10%, 20m per yr, also the capital is reduced by 100m.
23
busrider85 said at 11:02 pm on January 12th, 2010:
Sorry 08b x 10=.8b plus .9b initiall =1.7b hence .7b profit on 1 b investment
24
busrider85 said at 11:22 pm on January 12th, 2010:
If 20% default=> .8 b left to pay 10%=> .08 b on a .8b + .1b=.9 b asset now. Hence return on investment = .08b x 10 years plus initial .9 b= .98b => loss of .02 b
25
RobinHaryanto said at 11:40 pm on January 12th, 2010:
Very good video. but maybe it’s just me, but i think it would be better if you would not do those quiet muttering to yourself, it gets hard to follow after a while. Otherwise, it’s a great video, very informative.
But how if the SPE is formed 100% from money of the investors. Where did you get that officers hold 51% of the stock authorized? I am interested in learning more about it.
I believe that the SPE still maintains ownership of the loan rights because the officers collectively still hold more than 51% of the stock authorized. This is why today we are seeing investment banks that are losing tons of cash through these deals that were top-heavy a few years ago in the housing market. Investors obviously have gone through huge dividend cuts so everyone really loses.
mortgageartist. com
The best thing you can do is arm yourself with knowledge, even better if it’s free. a little time and a few clicks now could save you years and thousands of dollars later.
the choices you make today define your tommorow.
“i don’t know” – takia kalaam of sal
My question is, who owns my loan?
original bank got paid from investment bank.
Investment Bank got paid thru the MBS or investors.
If i default, who has the legal right to foreclose? If the investement bank already got paid?
Just a thought: maybe some of the people watching these vids are a little too advanced in their knowledge of the subject. These vids are for novices, like myself. Thanks for all you do, Sal.
Paulremote, I was thinking the same thing about the $2Billion going to the SPE.
I would like to ask a question
when a regular bank gives out $1 billion worth of loans it uses fractional reserve banking rules to bring new money into existence – right?
is it that when an investment bank buys these mortgages and sells them further – then existing money (i.e. savings) gets used.
Now, that most of these mortgage backed securities have gone to dirt – so is it that existing money (i.e. money that is no longer debt) got destroyed?
any responses are welcome
lol that is why we r in this financial crisis all thx to ABS, MBS, CDO and Credit difoult swaps CDS, do not learn this or i will be very conserned in US banking system in the future
They create giromoney in an account not “real” money. Most of the money today is only a number on a computer harddisk.
Public Sector debt is 13 trillion
Private Sector debt is 38 trillion.
Is it because of the 50% recovery rate? 20M of 100M default but 10M is recoverable, so total 10M loss?
My question: In the case where 20% borrower default, there seems to be a 15% loss in Total, why do you mention only a 10% loss?
Ideally, borrowers pay 10% per year over 10 years and pay back the total amount at the end. The investment bank receives $2Billion from borrowers.
If 20% default, with the 50% recovery on their properties.
The investment bank will get
$100m from the recovery
$800m from end pay-back
Year : 1 2 3 …. 9 10
Interest $: 80m 80m 80m 80m 80m
That is $800m over 10 years + $800m from the total properties + $100 from the recovery, that makes $1.7Billion, 15%loss??
In response to bubkboss1:
Believe it or not, $4.2 trillion of the debt is actually owed to the federal government itself. That means it’s owed to gov’t agencies such as the Federal Reserve and Social Security. This kind of debt, ARGUABLY, doesn’t have to be repaid. (Kinda like you paying back yourself).
Secondly, most of the remaining $6.8 trillion is owed to domestic American citizens/corporations. The gov’t owes China $1 trillion, which, comparatively isn’t bad as saying “China owns us.”
The notion that the Treasury Department is printing billions of dollars in money is completely FALSE. Just because the media shows money being printed anytime they cover financial news DOESN’T mean the Treasury prints money on a daily basis.
It is imperative you know that the Federal Reserve actually SHREDS $400 million dollars in a SINGLE DAY. Trust me, I have personally been to the Federal Reserve bank and seen $100 notes and $1 notes being shredded and removed from the circulation constan
I’m reading When Giants Fall by Michael Panzner. What you are discussing, according to Panzner, is a distinct possibility. Panzner cites that many countries are moving on financially because they have reached the point that America is no longer important to their wealth (e.g. Russia doing deals with Iran and China and omitting the U.S.) Panzner’s 2007 book, Financial Armageddon, is frightening in that what he talks about in 07 is happening now.
Terrific
our currency used to be backed by gold, now it is backed by government treasuries which are basically bonds that the government is obliged to honor, and yes alot of foreign countries own these mainly china. and to you second question if they no longer wish to purchase our treasuries which could very well happen very soon because of our printing billions due to bailouts then we would have a currency collapse and hyper inflation as seen in germany in the 1930s.
Very good stuff. Made easy enough for the common guy to understand. I looked at your other videos but did not see one explaining how our country gets into debt. If we have 13 Trillion as a country in debt, who do we owe? Do we print money or do we issue bonds? What if foreign countries don’t want to buy our bonds?
thanks
Now, not only the default make the problem worst, the asset(house) value went down, eg. 20% of 1b defaulted = 200m worth of asset, the owner r not able to make payment, the bank took their asset and put in on auction, guess what, if the asset value now drop to just 50%, the bank can only recover 100m, ie, it loses not only the interest of 200mx10%, 20m per yr, also the capital is reduced by 100m.
Sorry 08b x 10=.8b plus .9b initiall =1.7b hence .7b profit on 1 b investment
If 20% default=> .8 b left to pay 10%=> .08 b on a .8b + .1b=.9 b asset now. Hence return on investment = .08b x 10 years plus initial .9 b= .98b => loss of .02 b
Very good video. but maybe it’s just me, but i think it would be better if you would not do those quiet muttering to yourself, it gets hard to follow after a while. Otherwise, it’s a great video, very informative.