The document discusses the mortgage and secondary mortgage markets. It defines a mortgage as a transfer of interest in property to secure a loan. The primary mortgage market involves borrowers obtaining loans from originators. The secondary market involves originators selling loans to aggregators who pool them into mortgage-backed securities sold to dealers and then investors. This process allows originators to replenish funding and make more loans. The major players in the secondary market are Fannie Mae, Freddie Mac, and Ginnie Mae.

1. MORTGAGE MARKET
Rohit Vyavahare
Kashif Momin

2. Concept
Loan
Security
Property
As
mortgaged

3. What is Mortgage ?
 Section 58 of transfer of property Act, 1882 deals with the term “
mortgage”
 Mortgage is the transfer of an interest in specific immovable
property for the purpose of securing the payment of money
advanced by way of loan
 1. An existing of future debt;
 2. The Performance of an engagement which may give rise to a
pecuniary liability
 3. The transferor, owner of the property is called mortgagor
 4. The transferor, creditor or bank who gives loan, is called as
mortgagee
 5. The principal money and interest is the mortgage money
 6. mortgage deed

4.  The primary mortgage market is the market where borrowers and mortgage originators come
together to negotiate terms and effectuate mortgage transaction. Mortgage brokers, mortgage
bankers, credit unions and banks are all part of the primary mortgage market.
 it can be classified as
Primary security
mortgage of immovable property is taken as the primary security in case of loans for purchase
of land building or construction of house
Collateral Security
mortgage of immovable property in case of loan and advance to a business/trading concern

5. Features of Mortgage
 The mortgage must be owner of the mortgaged property or must
authorized by the owner for creation of mortgage
 Mortgage must secure debt
 The amount of loan and interest (mortgage money) must be specific
 Section 70 of T.P. Act states that if . After the date of mortgage any
accession is made to the mortgage property the mortgagee in the
absence of contract to the contrary , shall for the purpose of security , be
entitled to such accession

6. Types of Mortgage
Simple or Registered
mortgage
Mortgage by
conditionals sale
Usufructuary
mortgage
Mortgage by deposit
of title deeds
(Equitable mortgage)
Anomalous
martgage

7. 1. Simple
Mortgage
No possession is delivered
Mortgagee has no right of foreclosure
Mortgage has no power of sale out of court, but a decree
for sale of the mortgaged property must be obtained
It must be effected by the registered instrument
(mortgage document officially stamped by registrar)

8. Mortgage by
Conditional
sale
Mortgage ostensibly sell the
mortgaged property – on
condition
That on default of payment by
mortgagor on a certain date the
sale shall become absolute or
On condition that on such
payment being made the sale
shall become void

9. Usufructuary
mortgage
Mortgage money to be recovered from rents, means profits only.
No personal liability of the mortgagor
There is no remedy by sale or foreclosure
Mortgages can retain possession until repayment of the money and to receive rent and
profits or part thereof in lieu of interests or any repayment of mortgaged money
There is delivery of possession of property to the mortgagee

10. Mortgage
by deposit
of title
deeds
It is created in the towns of Calcutta , madras, Mumbai or any notified place a
mentioned in state Govt. gazette notification for the purpose
It is affected by deposit of original title deeds , no delivery of possession of
property taking place
No registration is necessary even if there is written record of deposit of title
deeds (Section 59) except where a State law has made mandatory to do so
Remedy is by sale through court and not by foreclosure
The most common security for commercial bank lending is the mortgage by
deposit of title deeds

11. Anomalous
Mortgage
According to section 58 g of T.P. Act,
Anomalous mortgage is a mortgage which is
not a simple mortgage, a mortgage by
conditional sale, usufructuary mortgage,
English mortgage and equitable mortgage
within the meaning of this section
It is usually a combination of two mortgage

12. Secondary Mortgage Market

13. Definition
 The Secondary Mortgage Market is where home loans and servicing
rights are bought and sold between lenders and investors.
 The secondary mortgage market is the market for the sale
of securities or bonds collateralized by the value of mortgage loans
 When a consumer obtains a home loan, that loan is underwritten,
funded and serviced by a bank or lending institution.
 Since the bank has used their own funds to make the loan, they will
eventually run out of money to loan, so they will sell the loan to the
secondary market to replenish their money available to make more
home loans.

14. How does it work ?
 Basically, it involves the buying and selling of mortgage-backed securities. The primary
lender makes a loan directly to a consumer, and then they sell it off through the
secondary market.
 A mortgage lender, commercial banks or specialized firm will group together many
loans (from the "primary mortgage market) and sell grouped loans known
as collateralized mortgage obligations (CMOs) or mortgage-backed securities (MBS) to
investors such as pension funds, commission base or percentage vise.
 The major players in the secondary mortgage market are Fannie Mae (Federal National
Mortgage Association), Freddie Mac (Federal Home Loan Mortgage Association), and
Ginnie Mae (Government National Mortgage Association).
 These are all private companies who enjoy plenty of government support. mission of
these organizations is to make home loans more affordable to more Americans.

15. Secondary Mortgage Market Participants
There are four main participants in this market
the mortgage originator
the aggregator
the securities dealer
investor

16. 1. The Mortgage Originator
 The mortgage originator is the first company involved in the secondary
mortgage market.
 Mortgage originators consist of banks, mortgage bankers and mortgage
brokers.
 Mortgage brokers act as independent agents for banks or mortgage
bankers. While banks use their traditional sources of funding to close
loans
 Mortgage originators make money through the fees that are charged to
originate a mortgage and the difference between the interest rate given
to a borrower and the premium a secondary market will pay for that
interest rate.

17. 2. The Aggregator
 Aggregators are the next company in the line of secondary
mortgage market participants
 Aggregators are large mortgage originators with ties to Wall
Street firms and government-sponsored enterprises
(GSEs) like Fannie Mae and Freddie Mac Aggregators
purchase newly originated mortgages from smaller
originators,
 form pools of mortgages that they either securitize into
private label mortgage-backed securities (by working with
Wall Street firms) or form agency MBSs (by working through
GSEs)

18. 3. Securities Dealers
 After an Mortgage backed service (MBS) has been formed it is sold to a
securities dealer.
 Most Wall Street brokerage firms have MBS trading desks.
 Dealers do all kinds of creative things with MBS and mortgage whole
loans. The end goal is to sell securities to investors.
 These deals can be structured to have different and somewhat
definite prepayment characteristics and enhanced credit ratings
compared to the underlying MBS or whole loans.
 Dealers make a spread in the price at which they buy and sell MBS

19. 4. Investors
Investors are the end users of mortgages.
Foreign governments, pension funds, insurance companies,
banks, GSEs and hedge funds are all big investors in
mortgages.
Certain tranches of the various structured mortgage deals
are sought after by based on varying credit quality and
interest rate risks.
Foreign governments, pension funds, insurance companies
and banks typically invest in high-credit rated mortgage
products.

20. Thank you………