mortgage-backed
Property-debt-based assets
Mortgage-backed describes securities or investments that derive their value from underlying mortgage loans.
When banks bundle home mortgages and sell them to investors, the resulting financial products are mortgage-backed: mortgage-backed securities, mortgage-backed bonds.
The collapse of the mortgage-backed securities market triggered the 2008 financial crisis.
Ties that unite
- tranchesPortions of a whole
- CDOPooled debt investment vehicle
- pass-throughTransferred without retention
- securitizationBundling debts into investable instruments
coupon · yield · maturity · prepayment · pooling · issuance · Fannie Mae · Freddie Mac
Security for debt
- underlyingExisting beneath the surface
- servicerOne who maintains
- trusteeOne managing another's assets
- originatorOne who initiates
waterfall · senior · subordinate · mezzanine · credit enhancement · cash flow · principal · interest
Year before 2009
- subprimeUnder top credit tier
- collapseSudden structural failure
- foreclosureLender seizes mortgaged property
- housing bubbleUnsustainable property price surge
credit crunch · Lehman Brothers · bailout · TARP · contagion · write-down · rating agencies · predatory lending
Potential loss from yield changes
- credit riskPotential for borrower nonpayment
- durationLength of existence
- convexityOutward-curving quality
- spreadTo distribute widely
downgrade · exposure · hedging · stress test · valuation · mark-to-market · impairment
bonds
Ties that unite
- tranchesPortions of a whole
- CDOPooled debt investment vehicle
- pass-throughTransferred without retention
securitization · coupon · yield · maturity · prepayment · pooling · issuance · Fannie Mae · Freddie Mac · agency
collateral
Security for debt
- underlyingExisting beneath the surface
- servicerOne who maintains
- trusteeOne managing another's assets
originator · waterfall · senior · subordinate · mezzanine · credit enhancement · cash flow · principal · interest · amortization
2008
Year before 2009
- subprimeUnder top credit tier
- collapseSudden structural failure
- foreclosureLender seizes mortgaged property
housing bubble · credit crunch · Lehman Brothers · bailout · TARP · contagion · write-down · rating agencies · predatory lending · underwater
interest rate risk
Potential loss from yield changes
- credit riskPotential for borrower nonpayment
- durationLength of existence
- convexityOutward-curving quality
spread · downgrade · exposure · hedging · stress test · valuation · mark-to-market · impairment
- investmentsbonds, stocks, securities, investment, equities
mortgage-backedunsecured
Not backed by collateral
uncollateralized · unbacked · debenture · faith-based · naked
back, backed, mortgage, mortgages, mortuary, mortgaged, mortgaging, mortgagee, mortgagor