Foreclosure Crisis Pros and Cons

Pros And Cons Of The Foreclosure Crisis
FINANCIAL MELTDOWN In 2008 the world economy faced its most dangerous crisis since the Great Depression of the 1930s. The contagion, which
began in 2007 when sky–high home prices in the United States finally turned decisively downward, spread quickly, first to the entire U.S. financial
sector and then to financial markets overseas. It began with mortgage dealers who issued mortgages with terms unfavorable to borrowers, who were
often families that did not qualify for ordinary home loans. Some of these so–called subprime mortgages carried low "teaser" interest rates in the early
years that ballooned to double–digit rates in later years. Some included prepayment penalties that made it prohibitively expensive to refinance. These
features were... Show more content on Helpwriting.net ...
Gates, Kanika Kapur, Seth A. Seabury, Eric Talley, Deregulation has been in trend in emerging markets or the developing countries ever since the
1990s when these markets began to globalize their economies and open them up to foreign competition as well as liberalize their economies internally
so that domestic firms are able to compete freely without the heavy hand of the state. This means that instead of the heavy hand of the state, markets
are left to work according to the invisible hand of the market economy. The complete analysis of the values that support deregulation has been
elaborated in the TABLE–1 given below– VALUES
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Case Analysis : Lehman Brothers
Executive Summary A decade ago the Lehman Brothers were the fourth largest investment bank in America. Dealing with Investment banking and
investment management, the Lehman Brothers was one of the largest global financial service providers. Consequently, the subprime mortgage crisis
left the company filing for the declaration of the chapter 11 bankruptcy protections, due to the unnecessary undertaken risk and obnoxious negligence
accusations directed towards the group. Companies should utilize observational and analytical pundit functions in identifying the presence of crisis
situations to avoid an economic downturn in the business (Pontell, 2014). The fraud would have prevented through stronger and better internal
controls, which... Show more content on Helpwriting.net ...
Accordingly, the firm had more mortgage–backed safes than any other company in the U.S; in fact, the mortgage–backed securities were four times as
many as its value of shared equity to its shareholders. In the early parts 2007, the company had a total of $86 billion worth of mortgage–backed
securities; the credit crisis of the U.S saw the stock value fall drastically (Pontell, 2014). The business was affected by the miscalculation; in the year to
follow the company would eliminate mortgage–related employee positions and close its offices in the BNC unit and the Alt–A lender Aurora in some
states. Relevant Elements from the Fraud Triangle Opportunity: The company's finance department had the chance to reduce the company's weight in
mortgage–backed securities. However, it chooses not to. The company's financial adviser did not evaluate any risk that would emerge in the economic
sector of the U.S during that year. Furthermore, the company had an opportunity to identify the consequence that would result due to the falling
mortgages; somewhat the company neglected this risk and increased in value of portfolio. Rationalization: At the early stages of the economic
depression, the company developed rationalized approaches to adhere to the economic change. The company let off a number of employees and closed
down a number of offices, nevertheless the company did not anticipate the coming

Effects Of The Financial Crisis Of Deutsche Bank 's...
7.Effects of the financial crisis Deutsche bank's involvement with collateralized debt obligations and residential mortgage–backed securities
contributed greatly to the housing bubble that burst in 2008 thus helping launch the great recession. Even though the residential mortgage–backed
securities were only trading in the United States our local economy here is extremely influential all over the world because of globalization, and the
interrelations of the world's economy. The recession created here by the housing bubble bursting helped to create a global recession. 8.Regulation Most
financial institutions do not hold themselves accountable. However, they do fall under the regulation of governing bodies. In the United States we
have the US securities and exchange commission (SEC) that regulates trading of commodities and securities that are exchanged on an open market. In
April 2010 the SEC proposed revisions to the application of asset–backed securities (CDO and RMBS). A few of the most important implementations
are that the issuer is required to file on the SEC website a computer program that provides investors "with a tool to analyze information about specific
loans within the pool of assets. This computer program would show the effect of the so–called "waterfall" so investors can analyze how the borrowers'
loan payments are distributed to investors in the ABS, how losses or lack of payment on those loans will be divided among the investors, and when
administrative

Causes of the Financial Crisis of 2008-2009
Causes of The Financial Crisis of 2007–2009
According to our financial textbook " Financial crises are major disruptions in financial markets characterized by sharp declines in asset prices and
firm failures" (Mishkin and Eakins 2012). In August 2007, defaults in mortgage market for subprime borrowers sent a shudder through the financial
markets, leading to the worst U.S financial crisis since the Great Depression. Alan Greenspan, chairman of the Fed, described the financial crisis as a
"once–in–a–century credit tsunami". (Mishkin and Eakins 2012). Furthermore, Wall Street firms and commercial banks suffered losses mounting to
billions of dollars. Households and businesses found they had to pay higher interest rates on their ... Show more content on Helpwriting.net ...
Moreover, many participants contributed to the creation of bad mortgages and the selling of bad securities, feeling secure they would not be held
accountable for their actions. The unregulated mortgage originators had no personal responsibility if those contracts failed. And so it was for brokers,
realtors, individuals in rating agencies, and other market participants, each maximizing his or her own gain and passing problems on down the line
until the system itself collapsed.(Jinkling 2010). In the end, these unregulated originators were concerned on their commission fee, for personal gains,
not if any of the loans were going to default.
The Originate to Distribute model plays an essential role, on the unregulated mortgage originators perspective and agenda. Many mortgage brokers and
lenders operated under the "originate to distribute" model whereby they originated loans solely for the purpose of selling them. This model allowed
them to earn loan origination fees without incurring any type of credit risk. Many times this model, allowed the unregulated originators to take
additional fees for collecting loan payments, escrowing and making payments for property taxes and insurance premiums. Additionally, unregulated
mortgage originators can charge a fee just by receiving customer inquiries. (Bank Law Committee 2009). According to Mishkin and Eakins, the
originate–to–distribute business modal was exposed to principal–agent problems, in

Pros And Cons Of Securitization
INTRODUCTION
Financial transactions are very common in today's world. In these types of transactions, security must be created. These creations of securities are
known as securitization. Security is a financial claim which is exhibited by document. The main feature of securitization is marketability. Henceforth,
securitization is creation of marketable and tradable securities which is hinged on the inflows and outflows (cash flows) of the assets and liabilities of
an individual. Cash flows refer to those generated in the asset side of the balance sheet mainly receivables; cash in bank and hand, plant and machinery.
The Special Purpose Vehicle (SPV) uses these cash flows to issue marketable securities to investors so that funds for the payment to the asset originator
can be arranged. Securitization is an innovation in the financial markets. For innovative financing sources, exceeding individual's cash flow status,
acquiring better liquidity position and issuing new securities to new individuals or group of investors, these innovative financing sources have become
a necessity. For mortgage financing in secondary markets, securitized instruments are also essential. An asset is eliminated from the balance sheet when
it is securitized.
In ... Show more content on Helpwriting.net ...
These included deregulation of financial markets, globalization and the increasing number of cross border transactions. All these resulted in the
increment for opportunities in financial engineering. Through securitization, one increases the capacity to lend of a Foreign Investment. Furthermore,
he does not have to search for additional capital or deposits. It is gaining worldwide recognition as the most innovative form of asset financing. The
profiling as well as the placement of different risks and rights of a receivable with most efficient owners is one of the most important impacts of
securitization. Securitization provides the following

COMM292 Case Studies
1. University of British Columbia Principles of Organizational Behaviour Girish Ananthanarayana COMM 329 – Section 202 – Winter Term 2 2014–15
Principles of Organizational Behaviour Girish Ananthanarayana COMM 329 – Section 202 – Winter Term 2 2014–15 University of British Columbia
Table of Contents Teamwork Turmoil............................................................................................................................5 Campbell and Bailyn's Boston
Office: Managing the Reorganization.............................................13 The Rise of President Barack Hussein
Obama..............................................................................23 2. TEAMWORK TURMOIL Tony Marshall, a second–year learning... Show more content on
Helpwriting.net ...
UVA–OB–0897 UVA–OB–0897 received a dual undergraduate degree in finance and information systems. Prior to business school, she worked as
an analyst for a private foundation. Martin planned to focus her career on private wealth. Despite the great amount of networking that her chosen
career path required, Martin was very involved in the school community. She spent a lot of time working on projects for the Black Business Student
Forum and the National Association of Women MBAs. Daren Onyealisi was originally from Nigeria and had been living in the United States for
more than 10 years. He graduated from the University of Maryland with a degree in government. Following his undergraduate degree, Onyealisi
worked as a policy research analyst for the District of Columbia, then changed career paths and worked as a real estate analyst for three years before
attending business school. Onyealisi was a first–generation college graduate and awarded the Robert Toigo Foundation Fellowship upon entering the
MBA program.1 While Onyealisi was not very involved in the graduate school community, through the Big Brothers Big Sisters of America
organization he was a Big Brother for local youths. Onyealisi planned to target the consulting industry for his summer internship. Rob Delery was the
only scientist in the group and earned a BS in chemical engineering from Penn State. During his undergraduate years, Delery was a member of the Penn

Causes of the 2008 US Recession Essay
Many people today would consider the 2008, United States financial crisis a simple "malfunction" or "mistake", but it was nothing close to that.
Contrary to what many believe, renowned economists and financial advisors regarded the financial crisis of 2007 and 2008 to be the most
devastating crisis since the Great Depression of the 1930's. To make matters worse, the decline in the economy expanded nationwide, resulting in
the recession of 2007 to 2009 (Brue). David Einhorn, CEO of GreenHorn Capital, even goes as far as to say "What strikes me the most about the
recent credit market crisis is how fast the world is trying to go back to business as usual. In my view, the crisis wasn't an accident. We didn't get
unlucky. The crisis came... Show more content on Helpwriting.net ...
Unfortunately, the mortgages would take a turn for the worst; thus, resulting in investment funds lost and the inability to repay the loans that they
borrowed from the banks (Isidore, 2008). Left with nothing, the banks were forced to declare the loans as unrecoverable, reduce the bank's reserve,
and limit their ability to generate new loans (Isidore, 2008). These actions destroy the economy because both businesses and buyers need loans to pay
for investment expenditures and finance consumption (Isidore, 2008). An early problem was " mortgage–backed security". According to AP Economics
19 edition, " Mortgage– backed securities are bonds backed by mortgage payments"(Brue). In order to create mortgage– backed securities, lenders
begin by creating mortgage loans (Brue). When they do, the lenders combine hundreds of loans into one and sell them off as bonds; basically selling
the right to regain all future payments (Brue). In the end, banks receive an individual payment for the bond. Bond buyers recover the mortgage
payments as the gain on the investment (Brue). As first, it seemed like a good decision on the bank's party because it moved any future default risk on
those mortgages to the buyer's bond (Brue). Unfortunately, they fail to realize that they had lent the significant amount of money they got from
investment funds to selling bonds (Brue). Moreover, the banks bought huge amounts of

Mortgage Backed Securities Summary
What are your thoughts about unknowing investors purchasing "mortgage backed securities"? Do you consider that the risk of investing? The United
States economy is still for the moment the largest economy in the world and despite what you may have heard it is the most well run. How do we
know this? During the global economic crisis, the United States was one of only two countries in the world supremely qualified to react quickly to the
crisis's, while the rest of the world plunged full speed into the crisis the United States as well as China could pull the breaks, stopping the car from
going over the cliff and into a depression. What caused this derailment in the first place? The short answer is mortgage backed securities. Mortgage
backed securities are a minefield of hidden losses, over leveraged mortgages, and insurance guarantees that are not sustainable. The market place is
based on consumers being able to buy a product that can reasonable do whatever it is that is advertised. This is the reason the federal government has
the FCC, ... Show more content on Helpwriting.net ...
The article begins by stating that this part of the market is very safe because the relative risk of those left in the market is so low. This is deceptive
because the bulk of the market tanked and died, so of course only the very strongest survived in the market this in no way minimizes the risk for bad
faith on the part of traders. The article also tries to tempt perspective investors by alluding to the fact that the FHA is insuring the risk, once again
tempting the investor to make judgements with some expectation of being bailed out on bad bet. The article does accurately state that private backed
securities carry no such guarantee but tries to cover this by intimating that they are taking less risk since the crisis. The article in the end does paint a
picture of how much danger there is remaining in this

Causes Of The 2008 Financial Crisis
The year 2008 was a horrendous year for most, in terms of money. The housing bubble deflated and the steep drop in prices sent both institutional
investors and average investors into financial turmoil. There is quite a bit of controversy as what actually caused the housing bubble, but in this essay
we will be using the explanation given by John C. Coffee Jr. Here he identified various factors that worked in tandem to subsequently cause the
financial crisis of 2008. The first was the systematic failure by what he termed a "gatekeeper." Which he later defines as financial institutions that
provides verification for investors. In this instance the gatekeeper was the credit agencies who failed to appraise the actual value of the mortgaged
backed ... Show more content on Helpwriting.net ...
To begin with, the industry must ever vigilant of the issues of asymmetric information. While there is no doubt that mortgages brokers did disclose the
terms of their loans whether fixed or adjustable; foreclosure and transparency may not always be synonymous. To say you have disclosed financial
information in a voluminous document written in esoteric financial jargon doesn't constitute financial transparency. In addition, by the end of the
mortgage crisis much of what would be constituted of due diligence constituted only a credit check. Although consumer credit behavior can forecast a
lot; it doesn't necessarily give a holistic assessment of risk with the borrower. Another layer that added to this complex financial meltdown involves the
bundling of mortgages securities graded according a uniform fashion, yet deriving its value from the underlying security (i.e. property on the
borrower). This lead to the bundling of assets that cross–contaminated one another and created a toxic environment for investing. Finally, we must ask
ourselves if bailing out large financial institutions that chose to take risk was a feasible solution. I personally would have liked to have seen a
solution similar to that which was implemented under the Regan administration to resolve the S&L crisis in 1980s. As a policy maker my
approach would have been as follows: my first objective would have been to stabilize the real estate market instead of providing an enormous pool
of liquidity to bail out investors, I would have targeted homeowners directly. Homeowners would have been able to get a third party appraisal from
which to reset their loans. The government would have paid off their loan and refinanced at the new market value at a fixed rate, with the
understanding that a capital gain tax of 10% would be applied to any equity beyond the new value at which the property was

Subprime Mortgages And The Mortgage Crisis
Mortgage securities are crucial when it comes to the availability and cost of housing in the United States. This paper will analyze the mortgage
securities market, and how the market functions. It will also focus on the subprime mortgages created from 2000 to 2006. Suggestions will be
presented that would protect against the types of problems experienced in the mortgage securities market from 2006 through 2009.
Mortgage securities are considered an ownership interest in mortgage loans made by mortgage companies, commercial banks and other private entities
to finance the borrower purchase home or other property. Mortgage securities were created when the servicers pool loans for sale to investors. The
investors receive payments of principal and interest when mortgage loans are paid off by homeowners.
Investors in the secondary market often purchase mortgage securities after they are issued. Large institutions make investments in mortgage securities
when they are issues. Other dealers in a secondary market sometimes redistribute securities.
Mortgage securities are issued by the Government National Mortgage Association (Ginnie Mae), or by government–sponsored enterprises (GSEs) such
as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (Freddie Mac, 2002).
Mortgage securities are often priced at a higher yield that corporate or Treasury bonds. The opportunities for profit are also greater. Mortgage

The Big Short ' Is A Financial Crisis Movie Directed By...
"The big short" is a financial crisis movie directed by Adam McKay and released in 2015. It bases on a truth story that some smart investors bet
against the United State mortgage market in 2006 to 2008. Michael Burry, an eccentric hedge fund manager, discovered with his own research that the
United State housing market was a bubble about to burst within in a couple years. He started to bet against the United State mortgage backed securities
market by convincing some large banks to create a credit default swap market, which was kind of a bond insurance police, and he invested about $1,3
billion in the credit default swap market. If he was right about the market collapse, his fund would bust up very high and make a hug profit. On the
other hand, his fund would be gone if the market stay stable.
Through Michael Burry's idea and action, the banker Jared Vennett who worked at Deutschebank quickly learned and understood that Burry's
predictions was likely true, and he made himself an opportunity of earning fees on selling those credit default swap to the firms, which the firms could
earn profit when the underlying mortgage bonds fail. He came to Mark Baum office and tried to convince him to buy credit default swaps. His
explanation about the market collapse would being more perpetuated by the packaging of subprime loans into collateralized debt obligations (CDOs).
Through Vennett's convincing, Mark Baum and his associated started to investigate the Miami housing market. He first

Questions On Mortgage Backed Securities And Credit Default...
Mortgage backed securities and credit default swaps are words we often hear in reference to the Great Recession of 2008. In this paper, I will be
discussing and analyzing an analogy Tim Harford uses to discuss the probability of buying a carton of eggs with an egg having a double–yolk to what
mortgage–backed securities and credit–default swaps meant and represented. In chapter 6 of the updated book, The Undercover Economist, a lady
named Fiona Exon is mentioned. In early 2010 she bought half a dozen eggs and discovered all 6 of them had double yolks. According to the
British Egg Information Service the chance of any given egg having two yolks is one in a thousand and for each one of the 6 eggs you keep
multiplying this probability and get a probability of one in a quintillion (thousand raised to the power of 18). This was reported to the media and
surprisingly more people called in to report discoveries of half a dozen double yolk eggs. This event that was known to be very rare was not really
that rare. The calculation, in reality, was wrong as they had made a wrong assumption that eggs with double yolks only come in clusters, increasing
the chance of seeing 6 double yolk eggs by a million billion fold with this simple assumption. So knowing that there was a really high probability of
ending up with half a dozens of double yolk eggs, Fiona Exon's friendly local egg retailer came up with a clever marketing wheeze and offered a
million–pound jackpot to any customer who

The Pros And Cons Of Securitization
Structured asset securitization is the process through which various types of non–liquid assets such as residential mortgages, account receivables, auto
loans and credit card debt obligations are sold to a special purpose vehicle ("SPV"), which uses the pool of assets as collateral for the issuance of
securities to investors (Fabozzi, 2013). During an asset securitization issue, one of the central elements is that repayment depends primarily on the
principal and interest cash flows from SPV's underlying assets, and not on the overall financial strength of the parent company or originator (Fabozzi,
2013; Riachi & Schwienbacher, 2015; Vink & Thibeault 2007). According to Vink & Thibeault (2007), securitization issues can be distinguished based
on their ... Show more content on Helpwriting.net ...
By achieving "bankruptcy remoteness", firms commit to more efficient investment decisions in bankruptcy (Ayotte & Gaon, 2010). In addition, this
practice together with other credit enhancement mechanisms, generally allow the new securities issued to obtain higher ratings from credit agencies –
including risk free levels. A number of studies have concluded that securitization has various positive implications. For instance, some empirical studies
show that securitization creates value by increasing liquidity, reducing credit and improving leverage ratios (Amrose, Lacour–Little, & Sanders, 2005).
According to Riddiough (2011), and it can alleviate market failure, and increase competition and borrower choice. In their study, Altunbas et al (2009)
show how banks' capacity to supply new loans has been strengthened by the securitization activity. In addition, another advantage of securing assets is
that funding costs can be reduced because the securities issued can match better the risk return preferences of investors (Aiyar et al,

The Problem Of A Housing Crisis
In order to prevent another housing crisis we must implement programs that would teach housing buyers and potential homeowners how to buy homes
wisely because most potential homeowners are unsophisticated and do not know at what rate to buy homes and set personal guidelines for mortgages.
The complexity of buying homes not only affected homeowners and home buyers but also confused sophisticated securities investors in that these
securities investors sold MBS (Mortgage Backed Securities) at an excessive price range that the MBS should never had been sold at. We need
legislative reforms that makes home mortgages to be more simplified and transparent market practices such as underwriting standards, in bonds or other
security measures based on these mortgages. There must be oversight in terms of those originating mortgages and selling them, at an astronomical
price. Unless legislature implement legal parameters that set the structural ground work for simplification we won't be able to stave off another
mortgage crisis. Denmark for instance has set up simplified system of residential lending and finance with logical costs of capital to borrowing home
buyers. Economically speaking it would be great if the United States government enact reforms that would bring about lower rates of household
investments in home ownership in this country. Households in the United States have long been overinvested in where they lived. In previous bygone
eras residential lending in the United States

The Downfall Of The Subprime Mortgage Market
The Downfall of the Subprime Mortgage Market During the housing boom, the subprime mortgage market enhanced the revenues of lenders,
investment bankers and investors alike. While some knew the trend would come to an end many did not. When the housing bubble burst and home
prices declined the effect on those involved was enormous, financial institutions who originally had low debt to equity ratios, soon found themselves on
the cusp of bankruptcy.
Housing Bubble Due to the U.S. Governments relaxed lending stipulations and low interest rates, the demand for houses soared from 1996 to 2006,
consequently increasing home prices across the country. During this time period home prices rose nearly fifty percent (Li, 2015). Comparatively, from
... Show more content on Helpwriting.net ...
Moreover, the foreclosure rate varied from only 1.58% on prime loans to an outstanding 12.55% on subprime mortgage loans (Subprime Mortgage,
2016). Due to the collapse in the housing market, foreclosures caused an estimated $71 billion in losses at the end of 2007, as well as, another $32
billion is losses to properties neighboring the foreclosures (Li & Li, 2012). Consequently, investors began to see the risk associated with mortgage
backed securities and began purchasing safer investment. The housing bubble burst had a profound effect on financial institutions involved in the
securitization of subprime mortgages and as such was the tipping point to the financial crisis.
Effect of Lenders, investment banks, and investors Since, those involved in the subprime mortgage market assumed home prices would continue to
rise, many were unable to foresee the fatal repercussions a crash in the housing market would cause. Once subprime loan delinquencies and
foreclosures increased, some lenders were forced to buy back the bad loans from investment banks negatively impacting their earnings and stock prices
(A Sub–Prime Primer, 2007). Furthermore, the value of mortgage back securities dropped substantially and combined with fewer buyers, investment
banks experienced enormous losses on their security holdings, which they were forced to record. In

Essay about Fasb Codification Assignment 1 вЂ“ Receivables
FASB Codification Assignment 1– Receivables You are spending your summer working for a local wholesale furniture company, Beds and Beyond,
Inc. The company is considering a proposal from a local financial institution, Old Faithful Financial, to factor Bed and Beyond's receivables. The
company controller is unfamiliar with the most recent FASB pronouncement that deals with accounting for the transfer of financial assets and has
asked you to do some research. The controller wants to make sure the arrangement with the financial institution is structured in such a way to allow
the factoring to be accounted for as a sale. Old Faithful has offered to factor all of the company's receivables on a "without recourse" basis. Old Faithful
(ASC 860–10–10–1) 5. Using the FASB Codification, determine what conditions must be met for a transfer of receivables to be accounted for as a
sale. Provide the specific paragraph citation that Beds and Beyond would rely on in applying that accounting treatment. Conditions that must be met for
a transfer of receivables to be accounted for a sale are as follows: a. Firstly, it should be considered whether the transferee would be consolidated by the
transferor (for implementation guidance). b. Then it should consider the transferor's continuing involvement in the transferred financial assets. c.
Lastly, it should require the use of judgment that shall consider all arrangements or agreements made contemporaneously with, or in contemplation of,
the transfer, even if they were not entered into at the time of the transfer. (ASC 860–10–40–4) 6. Assuming that the conditions for the treatment as a
sale are met, prepare Beds and Beyond's journal entry to record the factoring of $400,000 of receivables. Cash360,000 Due from Factors24,000 Loss
on sale of receivables16,000 Accounts (Notes) receivable400,000 7. An agreement that both entitles and obligates the transferor, Beds and Beyond, to
repurchase or redeem transferred assets from the transferee, Old

The American Dream
For generations homeownership has been viewed as one of the cornerstones of the American dream. Nevertheless this American dream has almost
exclusively been available to white Americans. However, over the past 25 years this dream has become a reality for more and more Americans as the
rise of the subprime mortgage market has allowed the majority of Americans to become homeowners. In 2005, at the peak of the housing bubble,
69.2% of Americans seemed to have achieved the American dream of owning their homes. Three years later, the housing bubble popped and the
American economy entered the most severe economic downturn since the Great Depression. The downturn was largely caused by the implosion of the
subprime mortgage market whose growth was driven, in part, by the belief that homeownership is a right that all Americans are entitled to as part of the
American dream. The perpetuation of this belief is dangerous to the United States economy because homeownership has for so long been unobtainable
for the majority of non–white Americans, as one of the only paths to this American dream for many minorities is through high–risk home loans that
threaten the stability of the economy. Homeownership first became attainable for many Americans in the 1950's when New Deal legislation
compounded the effects of post World War II social reform programs and an increase in home construction promoted homeownership among white
Americans. For the first three decades of the 20th century,

Liar's Poker Essay
arMary Petritz
Real Estate Seminar
November 10, 2011
Liar's Poker
Liar's Poker, by Michael Lewis, is a book that thoroughly looks into the author's life as a broker on Wall Street working for Salomon Brothers, the
most profitable firm in the 1980's. Michael Lewis graduated from The London School of Economics and decided to take his career into trading when
offered a job by the top– trading firm. At this time, the mortgage market started booming, and money was flowing all over Wall Street. The secondary
mortgage market was on the up–rise when Michael Lewis accepted a job at Salomon Brother's. The secondary mortgage market was the selling of
bonds, with a promise to be paid back with mortgage loans. The lender, whomever that ... Show more content on Helpwriting.net ...
In October 1981, Congress passed a tax break that allows thrifts to sell their money–losing mortgage loans and reinvest the proceeds for higher returns.
Mortgages were pooled by dollar amount and interest rate and then traded. Salomon Brother's wanted to make mortgages look like bonds. Ranieri
had the loans transferred into bonds by getting a stamp of the U.S. government agency Ginnie Mae, Frannie Mae, or Freddie Mac. The stamp was
proof of the U.S. government guarantee that made trading mortgage bonds possible. Ranieri's mortgage department made 215 million over 3 years.
After 6 years, Ranieri's mortgage department was making more money than any other Salomon businesses combined. They formed this group of
traders, all characterized as Italian, loud, and fat. Ginnie Mae, Frannie Mae, and Freddie Mac were U.S. government agencies that guaranteed various
types of mortgage loans. They allowed mortgage lenders to obtain a better price for their mortgage loans in the securities market. Lenders used the
proceeds to make new mortgage loans available. After some time, and with the mortgage market soaring, buyers and sellers were making their own
rules. Salomon Brother's created a CMO in 1983, which dominated the mortgage market in 1986. The mortgage market was attractive to many
investors due to the money outflow that it generated. It was unattractive to some investors due to the stress, competition, and buying

The Impact Of Securitization Techniques On Commercial...
The most influential person in my life, my dad, always tells me how in order for me to be able to live the American dream, I have to work like there
is somebody trying twenty–four hours a day to take it all away from me. He also mentions that a college degree is crucial to the American dream, and
is worth all the financial sacrifices for the reason that it will open all doors to a world of opportunities. Armed with this bit of philosophy, I graduated
with a cum laude from Pace University in Quantitative Business Analysis, minor in Mathematics and achieved a major GPA that placed me in the top
of my class. In order for myself to become the expert that others rely upon and achieve my careers goals, I must continue my studies.
My job placement at Barclay`s since august of 2015 had fortified my interest in the areas of finance as I am able to experience the impact of
securitization techniques in Commercial Mortgages Backed Securities (CMBS). My main role is to monitor the process of taking a group of assets,
and through mathematics and finance, transforming them into a security. I want to further diversify my business skills set beyond securitized products,
then help me grow a deeper understanding of corporate finance, financial reporting, fix income, all valuable skills and techniques that will help me
attain my short–term goal and prepare me for my long term objective.
I am very excited to be considered to the MBA in Financial Management program because it will allow me to

Mortgage Backed Securities : Cause And Effect
Mortgage–Backed Securities: Cause & Effect
Introduction
New–Age Guru Deepak Chopra once said that Wall Street was broken because it had succumbed to greed, corruption, and pure speculation with no
real values. At the time, Chopra was informing his audience about the correlation between perception and fragility. Although perception can be
changed, fragility cannot: a 100lb sac of concrete is still the equivalent of a 100lb sac of dollars.
During the mid–1990s, the US economy had maintained stable growth, low unemployment, and low inflation; it was the longest undisrupted growth
period post– the Vietnam War, the Dot.com Boom, and the stock market crash of 1987. Therefore, many politicians, economists, and consumers were
under the assumption that the economy was very stable. But in reality this growth period was a faГ§ade because it was built on mortgage–backed
securities. Ultimately, since fragility does not change, mortgage–backed securities was one the main catalysts for the 2008 financial crisis, a crisis that is
still affecting the country today. Throughout this paper, I hope to inform you about the causes and effects of mortgage–backed serecurties.
Cause: Creation of Mortgage Backed Securities
In the fall of 1982, Congress passed the Garn–St. Germaine Depository Institution Act, a law used to revitalize the housing industry by strengthening
the financial stability of mortgage lending institutions (Reagan). Nevertheless, this well–wished Reagan initiative was

Essay On Mortgage Rate
If you're not a financial professional, it may seem like mortgage rates are pretty much arbitrary. One day, they're sitting stable at 3.75%. A month
later, they could be 4.375%. Since these rate fluctuations can cost you thousands of dollars over the life of your mortgage, these rate changes can
be extremely frustrating for home buyers. That's why it's a good idea to understand the driving forces behind your mortgage rate. It will help you
understand when it's a good idea to lock in a rate, or at the very least, help you make sense of your investment. One of the most important factors in
determining your mortgage rate is the 10 year bond yield. Simply put, 10 year treasury bonds are financial products offered by the government that
offer a low rate of return. This low rate of return is offset by the security of the investment. Investors make very little money on 10 year bonds, but their
money is extremely safe.... Show more content on Helpwriting.net ...
As a result, bond rates tend to rise in order to create demand for them. Conversely, when investors are afraid of indicators in the financial sector, they
turn to safer investments like bonds. The rate of return on these bonds drops in parallel with the increased demand for them. Mortgage–backed
securities are investments packaged by financial institutions for the secondary mortgage market. Investors are able to pay for shares in a bundle of
mortgages, and they receive a yield when the mortgages are repaid. These investments tend to be used in a similar fashion as the 10 year treasury
bond, and their rates move in tandem. Basically, if the 10 year bond is dropping, mortgage rates tend to do so as well––and vice versa. However, the
bond rate isn't the only determining factor on your mortgage rate. The housing market itself has a great deal of influence on it as well. This impact is
also the result of supply and

Data Desscription for the St. Louis Federal Reserve Bank...
In the research, data was extracted from FRED which is the database of the St Louis Federal Reserve Bank and Bloomberg. Ordinary least squares
(OLS) analysis was used in order to perform the regressions needed to calculate the results. The data was taken exclusively on a domestic level
although quantitative easing was implemented abroad as well by the Bank of Japan in 1999.The data was chosen solely from the United States due to
easier access to the data and the focus of the research to analyze United States economic affairs. The dependent variables are 5–year Treasury bill,
10–year Treasury bill, 15–year fixed mortgage rate average in the United States, and 30–Year Fixed Rate Mortgage Average in the United States. The
data helps to explain how the different rounds of quantitative easing affected mortgage rates and how it will affect the long term treasury yields. Fixed
mortgage rates were chosen since long–term rate are the most common and the most highly targeted by the fed. The treasury bills were chosen in
order to compare to the mortgage rate since it is known that a large portion of QE was targeting the long term mortgage rates as opposed to short term
treasury bills, so we wanted to display the difference between the two.
The independent variables are the following: Money supply (M2), monetary base, fed funds rate (FFR), consumer price index (CPI), expected Inflation
(Mich), mortgage backed securities (MBS), Treasury securities, Baa, Aaa,baa10y, safety spread, QE1,

The Key Role Of The Commercial Rating Agencies
The pivotal role that the three large US credit rating agencies Moody's, Standard & Poor's (S&P) and Fitch played in the recent subprime mortgage
lending and the following financial crisis has led to extended regulation of these agencies and requires significantly more regulation. Credit rating
agencies and the ratings they supply are critical information resource for investors. An error in the credit rating process has a huge impact on buyers
and sellers of credit. It also affects the overall performance of the financial markets.
Oligopoly of the credit rating agencies
The rating industry is known as an oligopoly, because there are only three significant credit agencies in the US – Moody's, Standard & Poor's (S&P)
and Fitch. In an industry run by oligopoly, perfect competition does not exist. Because each company has a large market share, they are said to have
market power, a situation where one or more of the participants is able to set the price or other outcomes in some general or specialized market. The
oligopolists have the ability to dictate the market. In oligopolistic market one company may fear that if the other company rises price, rivals will
refuse to reciprocate and will take a substantial amount of its customers, leading to the firm's large drop in sales. Since the transactors in bond markets
are mostly institutional bond managers, financial institutions should have the ability to receive the bond creditworthiness information from a broader
range of

Financial Crisis And The Crisis
Summary Mortgage–backed securities and subprime mortgage crisis were generally thought to be the cause of the 2008 financial crisis. This paper
will be discussing the cause of the financial crisis and the relationship between mortgage–backed securities and the crisis. The paper will further
describe the actions taken by the government to recover the securities. The Cause of the Financial Crisis and the Recovery It is believed by many
and known by some that the historical damage in the crisis of 2008, called the "financial crisis" was pushed by the housing bubble. The recent crisis
was the biggest horror around the world since the Great Depression. Prices of houses were rising since the year of 1999 and then rose by 6% and
continued at a... Show more content on Helpwriting.net ...
In fact, MBS has a structure where borrowers, or homeowners, pass through their principal and interest payments to the owner, or investor, of the
MBS. The housing market was at all times high and everyone was attracted to invest in this sector. However, there was not enough money for the
public to buy houses at such a high price and as a result, people sought for ways including seeking home loans from local banks. Even people with
bad credit history were motivated to buy houses for the high gains thereafter. The banks and brokers lent out money at the prime lending rate to
people with average credit history, while lending at a higher than prime lending rate to people with bad credit history, without much prior
investigations. At the same time, investment banks offered attractive rates of returns to the investors of MBS. As MBS are often repackaged and
resold as obligations to collateral debts, the lower quality of credit ultimately resulted massive defaults as the housing market declined. Superficially,
the high interest "subprime" loan presents nothing that is devious or illegal, it is simply a case of lender taking on a higher risk and receiving a
higher interest rate in compensation. Yet, nearly half of the loans made in 2006 were of the subprime variety, which increased the risk of borrowers
defaulting on many banks' balance sheets. According to the Brookings study notes, "Prime mortgages dropped to 64% of the total in

Asset-Liability Management
Asset–Liability Management
"Asset–Liability Management (ALM) can be defined as the ongoing process of formulating, implementing, monitoring and revising strategies related to
assets and liabilities to achieve an organization 's financial objectives, given the organization 's risk tolerances and other constraints"[1]. ALM also is
known as balance sheet management. In banking activity the gap between assets and liabilities can bring some consequences where the following risks
are arose. And as a whole it influences badly on the bank's functioning. Solving that problem is the primary goal of ALM. The good balance sheet
management means that the return on loans and securities as the highest as possible, risks are minimized and ... Show more content on Helpwriting.net
...
Also it is involved in structuring the transaction. At the same time the underwriter provides consultations in marketing and law.
Benefits and drawbacks of asset securitization
Before asset securitization was created, banks lent money to households and companies and these loans existed in the banks' balance sheets until
they mature or are paid off. This creates a mismatching of assets and liabilities because typically banks use deposits and issuance of debts as a
provision of loans. And both of them have shorter period of maturity then banks' lending especially cars and mortgages loans. Since the bank started to
use securities backed by assets or in other words it started to transfer the ownership of the assets to SPVs, the great opportunities have began widely
available for the bank. And the main of that fee income and additional trading opportunities are providing. Securitization is the process of transforming
illiquid assts into marketable securities. This helps banks to maintain or even increase their liquidity because long–term loans are replaced to SPVs. As
a consequence, the gap between balance sheet sides also is diminished. And as a result the position of the bank becomes more stable and it frees up
capital to provide new loans. In other words, the opportunity for bank to lend additional funds to the consumers appears. Moreover, securitization
provides quick access to funds that

Managing The Global Financial System
In today's financial world systems, methods have been developing exponentially that reduce risk and increase the profits of investors who are
financially able and willing to commit funds to investments, becoming part of the global financial system. The methods are sophisticated and require
financial experts who are entrusted to make the right choices in arranging the best investment plans that will benefit these investors. One of these
increasingly popular methods is asset securitization. Measures in the application of this particular method have been improving, especially since the
market crash of 2008. Structured finance, which is another word for securitization, is an alternative, non–standard way of raising money by creating ...
Show more content on Helpwriting.net ...
For example, in the United States, farm railroad mortgage bonds were some of the earliest forms of securities. Later, in 1970, the U.S. Department of
Housing and Urban Development created the first modern residential mortgage–backed security, creating the Government National Mortgage
Association (GNMA or Ginnie Mae). Some years later, the model developed in securitization of mortgage–backed loans was also applied to
non–mortgage assets such as automobile loans and credit card sales by banks. In the 1990s, the life insurance and reinsurance (catastrophe coverage)
markets began using securitization. Securitization in in the reinsurance markets played an important role after Hurricane Katrina.
As mentioned before, there are certain steps which take advantage of this method of financial structure. First, if there is a company that wants to obtain
financing through securitization, that company will start by identifying assets that can be used to raise funds. These assets typically represent rights to
payments at future dates and are usually referred to as "receivables." The company that owns the receivable is usually called the "originator." In this
process, the risk that these payments many not be made on time is an important factor in valuing the receivables. In this factor, emphasis and
confidence is place on the originator, who must reasonably predict the

Essay Selling Mortgage-Backed Securities
Introduction
According to news article on September 2nd contributed by Rexrode (2011) from AP, "The government on Friday sued 17 financial firms, including
the largest U.S. banks, for selling Fannie Mae and Freddie Mac (Appendix) billions of dollars worth of mortgage–backed securities that turned toxic
when the housing market collapsed". Beyond the apparent legal issues, this article intrigued me to examine whether or not there are ethical issues
involved regarding banks selling mortgage–backed securities. A mortgage–backed security is defined by Securities and Exchange Commission (SEC
2010) as debt obligations that represent claims to the cash flows from pools of mortgage loans, most commonly on residential property. To put it simple,
After reaching its peak in 2006, the US housing market finally collapsed, since then average house price have drop more than 30% as of 2010.
(Parsons, 2011) What caused the housing price collapsed, that ultimately led to the downward of US Economy, was that many mortgages were paid by
adjustable–rate (Appendix), which increases in accordance with house price. Since the house price were picked up in an ascending speed from 2000
to 2006, so was the interest rate homeowners had to pay every month. Eventually, the interest went extremely high in 2006 and homeowners could not
afford to pay their monthly mortgages anymore, and lost their home to the banks. That caused the chain reactions resulting in the dramatic price drop
of mortgage backed securities because of diminishing house price. Dramatic security price drop could not have caused the house price dropped; on
the contrary, had only the dramatic house price drop led to the securities price drop that ultimately cost investors billions of dollars. As a matter of
fact, major banks and financial firms were only issuers of those securities; they have limited involvement and no direct control over price of securities.
Thus, banks should not hold responsible for the house market collapse because it was simply market reactions.
Investors vs. Major Banks
Banks should not be blamed for causing investors hefty losses by selling securities; instead, investors

Case Study: Fraikin Sa
Case Study: Fraikin SA
Comparison of Three Financing Options
a. Background Analysis Current Situation Founded in 1994, Fraikin group, the largest French truck rental operation, took up 30% of the market share
by 2004. The core operation business of Fraikin is to provide its clients with customized trucks and commercial vehicles, primarily under long–term
operating lease contracts. During the period from 1999 to 2002, the number of the leased trucks was continuously increasing (from 59,600 to 74,300),
which indicated a stable growth of the company and a possibly booming market in the future. However, as a capital–incentive company, only
continuous investment on fleet maintenance and expansion can retain Fraikin's leader position in the ... Show more content on Helpwriting.net ...
It also meant the insufficient operating income cannot afford the interest, debt or preferred stock dividend which were required by investors and
shareholders and thus would hurt the value of the firm. If, LBO financing would improve the operating ability, thus increase EBITRDA more than
interest and debt growth, this option should be applied. However, if as Fraikin expected, the company would experience worst scenario in the future,
the EBITRDA and cash inflow would be even tougher and it is better to consider other financing alternatives. Studies suggested that the occurrence of
LBOs is positively related to the existence of target firms that have large and stable cash flows and the possibility of future tax savings. Compared to
the current situation of Fraikin, who was facing negative cash flow and a high debt–toequity of 2:1, continuous financing through LBO may give rise to
overleverage. c. Assets–backed Loan Generally, an assets–based loan is the loan secured by a company's assets. In this case, longterm lease receivables
was regarded as backed assets to secure the loan. 14.3% of the total fleet was involved in this option and 19,925 long–term contracts with average term
of 5 years would be used as collaterals. Advantages and Disadvantages Asset–based loan make

Financial fraud has been present since before the...
Financial fraud has been present since before the Industrial Revolution, many cases making a long lasting impact throughout history (Pearson, T. A., &
Singleton, T. W. 2008). The 2008 financial crisis was carried out with a significant amount of pressure throughout many industries, results including
fraudulent activities. Back of America was brought to the forefront of the financial crisis when mortgaged backed securities collapsed. The US
Government sued Bank of America in connection to defrauding investors, following an ongoing investigation into their direct actions during this time
period. During the ongoing investigation, stemming from the financial crisis, Bank of America continually tried to prove their innocents and their lack of
Finding themselves in an irreversible situation, Bank of America began to adjust their standings on their actions during the investigation. Bank of
America failed to maintain their innocents numerous times as evidence brought against them during their trial proved their involvement and avoidance
of proper procedures, when dealing with mortgage investors. The US Government looked to come to a conclusion with a remedy for the investors
involved in the case as well as the individual on the other side of these fraudulent mortgages. An investigation begun, which looked to hold banks
accountable for their actions during the financial crisis and pervious time periods where their actions led to a significant collapse. U.S Attorney
Tompkins stated he had "made a commitment to the American people to hold financial institutions accountable for practices that violated the law and
wreaked havoc on the financial system, and my office takes that commitment very seriously. Our investigation into Bank of America's mortgage and
securitizations proactive continues." (Department of Justice Sues Bank of America for Defrauding Investors in Connection with Sale of over $850
Million of Residential Mortgage–Backed Securities. 2013, August 6) Similar statements were made to ensure the American people that steps were
being taken to hold bank accountable for illegal actions that they had made, which led to a massive housing market crisis. Bank of America's defense
stressed

The View Of Green And Shoven ( 1986 ), Under Phm Model
In the view of Green and Shoven (1986), under PHM model, influencing factors mainly include four aspects: 1. the refinancing rate R(t) and contract
interest rate c, when the refinancing rate is lower than the contract interest rate , prepayment will be : Thus the prepayment is caused by the difference
between contract interest rate and refinancing rate. 2. The refinancing rate will also cause the accelerating effect on prepayment. 3. The prepayment
also has relationship between mortgage balance and prepayment rate. As a higher cumulative prepayment, the lower the mortgage balance will be,
which is shown below: Where, measures the mortgage balance at the beginning of period t if there is prepayment. is the mortgage balance at... Show
more content on Helpwriting.net ...
Refinancing Incentive= 0.31234 – 0.20252* ATN(8.157*[– (Coupon + loan–servicing rate) / (refinancing rate + refinancing cost) + 1.20761] Where
ATN is the arctangent function. ii. Month Multiplier (i) = ( 0.94, 0.76, 0.74, 0.95, 0.98, 0.92, 0.98, 1.10, 1.18, 1.12, 1.23, 0.98 ) iii. Seasoning
Multiplier (i)= min ( 1, t/30 ) iv. Burnout effect = 0.3+0.7* (mortgage balance at t / mortgage balance at t=0) CHAPTER–3: MBS Summary 1.0
Introduction of Mortgage–backed Securities and Causing Risks Generally, mortgage can be divided into fixed–rate mortgage and adjustable–rate
mortgage. From the research of Campbell and Cocco (2003), adjustable–rate mortgage allow the lenders transfer interest rate risk to borrowers by
offering a lower initial mortgage rate. Thus adjustable–rate mortgage could raise the affordability. However, fixed–rate mortgage makes borrowers
carry less credit risk, especially for those who earn less and buy more expensive houses ( Lin, Prather, Chu and Tsay, 2013). Currently in China, MBS
uses floating interest rate as the mortgage rate. In the following part I will elaborate the adjustable–rate mortgage, which will be represented by
mortgage rate. Assets securitization is the process to transfer non–liquid assets into a security. Banks and companies provides pool of

Securitization Of Housing Bets
Mortgage–backed securities were bonds that were secured by home and other real estate loans. They were created when a number of these loans,
usually with similar characteristics, were pooled together. As part of the housing and credit booms, the amount of financial agreements called
mortgage–backed securities, which derive their value from mortgage payments and housing prices, greatly increased (Subprime mortgage crisis). Pools
of loans were sold to federal government agencies like Ginnie Mae or a government sponsored–enterprise such as Fannie Mae or Freddie Mac.
Securitization was the process of taking an illiquid asset, or group of assets, and through financial engineering, transforming them into a security. A
typical example of securitization ... Show more content on Helpwriting.net ...
The worst of the mortgages were packaged and tranche into bonds and got rated AAA by these credit rating agencies. By erroneously rating these
bundles of mortgage–backed security payments too highly, the credit rating agencies substantially contributed to the creation of toxic financial assets.
The problem was each agency were competing for the banks revenue, to keep the banks business the agencies would always rate their bonds the
highest possible grade of AAA.
Executives at Fannie Mae packaged both conventional and sub–prime loans, while operating almost free of government oversight. Fannie's leaders
spent lavishly to hire sixty Washington lobbyists who showered congressmen with campaign funds. Executives at Fannie were generous to the
politicians because they wanted to ward off regulation (Toplin). Adding another layer to this financial disaster happened when the Treasury bill rate
went so low investors had to find other ways to yield a profit, and with little oversight, executives certainly had no problem introducing creative
financing to main street America.
Mortgage underwriting standards declined precipitously during the boom

Disadvantages Of Securitization
As securitization seems to be a lucrative way for banks to not only enhance liquidity and diversify risk but also improves their performance considerable
incentive problems occurred during the turmoil and among the different parties. Those incentive problems led to information asymmetries and moral
hazard among the involved stakeholders .As the Bank/Originator creates reference pool sells them to the bankruptcy remote trust (such as Fannie Mae or
Freddie Mac) Bankruptcy remote trust buys reference pool and securitizes it sells them to the capital market where potential investors exists to
purchase securities purchase of securities by investors 6 gap between mortgage originators and investors increases, it reduces the incentives for lenders'
to screen mortgage applicants thoroughly. During the turmoil banks had more and better information about the Mortgage Backed Securities and their
performance value in contrast to third parties as they knew more about the mortgage applicant and the underlying mortgage loan .As bank incentives are
to issue more mortgage loans and then sell them to bankruptcy remote trusts to securitize them, they did not bear the risk of the mortgage default and
this leads to ... Show more content on Helpwriting.net ...
Therefore, the process of transfer of the receivables from the originator to the SPV involves an outlay on account of stamp duty, which can make
securitization commercially unviable in several states. If the securitized instrument were issued as evidencing indebtedness, it would be in the form of
a debenture or bond subject to stamp duty. On the other hand, if the instrument is structured as a Pass Through Certificate (PTC) that merely evidences
title to the receivables, then such an instrument would not attract stamp duty, as it is not an instrument provided for specifically in the charging

The Mortgage Crisis : The Real Estate Market Essay
The mortgage meltdown is the period where the real estate market noticed a steep increase in home foreclosures that led to a period of insanity in
2007. This meltdown was the driving factor behind the economic recession that burdened the United States' economy in 2008–2009. To begin, the
housing bubble popped. The housing bubble was the highly overvalued real estate market. The burst of this bubble, which led to the financial crisis,
was a correction to the overvalued real estate market. The real estate market, like any market, is subject to the basic law of Economics: supply and
demand. It began with subprime lending all over the United States that showed a jump in demand or shift in the demand curve to the right. Subprime
lending is where banks grant mortgages to individuals with poor credit history. In time, the individuals defaulted of their loans or failed to make
payments.
The presence of Mortgage Backed Securities (MBS) in many family's hedge fund, mutual fund and pension plan investments gave the subprime lending
of small local banks a nationwide impact. Mortgage Backed Securities originate in a regional bank, these smaller banks then bundled up many
mortgages and sold the bundle of mortgages to big investment banks. The negative impact would have been limited if it had not been for the large
presence of MBS in the many common investment portfolios. These investment banks then make a corporation and put the mortgages as assets of the
corporation. From there, the

Financial Innovation And Its Effect On The Financial Crisis
Another problem connected to the securitization of loans is the fact that the required off–balance sheet transactions increase the difficulty of
determining a company's true leverage. While off–balance sheet transactions are not necessarily a bad thing, they do disguise the true debt of a
company in that they make it appear as if the obligation to repay the security investors falls on the SPV rather than the originator (Pala). Furthermore,
a movement of assets to an SPV can result in the appearance of a reduction of leverage, which may make a company appear more attractive to
investors, or in the case of a bank, allow them to decrease their capital requirements when they have not in fact de–levered and have simply moved
items off of their... Show more content on Helpwriting.net ...
Thus, the novelty and complexity of these new securities can result in grave misunderstandings about not only the functionality, but also the riskiness
of certain forms of securitization. Involvement in the 2008 Financial Crisis The 2008 financial crisis is complicated, as are its many causes, however it
is clear that poor understanding and lack of regulation of securitization played a significant role in bringing about the crisis. The problems began when
housing prices started to decline in 2006, resulting in an unexpected increase in mortgage defaults as homeowners found themselves owing more on
their mortgage than their houses were worth. When mortgages began to default, the collateral on mortgage–backed securities lost its value, which
resulted in the failure of banks, GSEs and funds that had invested heavily in mortgage backed securities, and another related offerings (Schulz). These
failures scared investors who quickly tried to recoup their investment, which resulted in essentially a run on the shadow–banking system that had
developed around the issuance of asset–backed securities and related financial innovations–and the rest of the crisis is well known history that need not
be reviewed. Securitization can be blamed in part for the crisis because were it not for its invention, the

The Problem Of Global Financial Crisis
"Securitisation is the process whereby loans, receivables and other financial assets are pooled together, with their cash flows or economic values
redirected support payments on related securities." "Securitization first emerged in the 1970s with the sale of securities backed by residential mortIn
the 21st century, economic problems have incurred an increasing number of people 's attention as the economic develop rapidly, and these problems
are usually caused by human themselves. For instance, the occurrence of Global Financial Crisis (GFC) in 2007 was induced by people themselves
who expect that the economic level could be constantly maintained in the impractically high position, but there are lots of issues caused by such high
level of economy. Even though the whole world economy is trying to recover from the Global Financial Crisis, but it still has some propagation
effect to other countries until now. There are many factors could cause the Global Financial Crisis, impractically high economic level is one reason
that is mentioned previously, and another primary reason of Global Financial Crisis is the securitization. "Securitisation is the process whereby loans,
receivables and other financial assets are pooled together, with their cash flows or economic values redirected support payments on related securities."
"Securitization first emerged in the 1970s with the sale of securities backed by residential mortgages". (Dov Solomon, 2012) The narrow sense of
securitisation

Financial Crisis After The Great Depression
2008 Financial Crisis Not since the great depression was there such a devastating economic crisis as the 2008 financial crisis. A crisis rooted from the
burst of the housing bubble in the U.S. thus leading to the government being brought down, ruined economies, crumbled financial corporations and
impoverish lives of numerous individuals. As reported in McClean and Nocera's All the Devils Are Here: The Hidden History of the Financial Crisis,
"the seeds of [the] financial disaster were sown more than thirty years ago when three smart, ambitious men, working sometimes in concert–allies in a
cause they all believed in–and sometimes in opposition–competition trying to gain advantage over each other–created a shiny new financial vehicle
called the mortgage–backed security" (McClean and Nocera). Therefore, the mortgage–backed security (MBS) is essentially the sole reason or seed
that lead to the financial crisis. However, the mortgage backed security is not totally to blame on Wall Street as it's not something that Wall Street did
entirely on its own. As the United States government aided and abetted them in certain circumstances in which they changed laws to allow the
fraudulent ways of the people on Wall Street to continue on ("The Fall of the Market"). Ultimately, when Wall Street took part in the financial sector
its focus was to broaden the appeal of securities to wider range of investors to create more capital for itself. The development of mortgage backed
securities

Causes And Consequences Of The Housing Bubble
A combination of factors in the early 2000 's caused the perfect economic storm to trigger the worst recession the United States had experienced since
the Great Depression of the 1930 's. The "housing bubble" and subsequent burst left homeowners owing more on their mortgages than the property was
worth and fueled the financial crisis of 2007–2009. Many economists label the housing bubble as the single largest contributing factor to the financial
crisis. Caused by low–interest rates, relaxed standards on lending and the misguided belief that prices and the value of homes would continue to
rise, the US economy is still recovering from the effects of the housing bubble. To understand the causes and consequences of the housing bubble,
we must first define it. In general terms, an economic bubble is "characterized by a surging increase in asset prices to levels significantly above the
fundamental value of that asset" (Campbell, 2011). The housing bubble was characterized by steeply rising home prices, with no corresponding rise
in home rentals as shown in Figure 1. Case & Shiller examine the origin of the term "housing bubble" stating that the term appeared a few times in
1987 after the stock market crash. The term was not seen again in any frequency until 2002, when the press popularized the term. The paper also links
housing bubble to the more widely used term "housing boom" which was described as being "much more neutral than 'bubble ' and suggests that the
rise in prices may

Implementation of Student Loan Asset-Backed Securitization...
IMPLEMENTATION OF STUDENT LOAN ASSET
–BACKED SECURITIZATION IN MALAYSIAN HIGHER EDUCATION. (A STUDY
CONDUCTED AT MALAYSIAN ECONOMY IN THE ASIA) Paper no.60 ABSTRACT The research is to investigate the alternative financing in
Malaysian Higher Education by introducing student loan securities as a type of asset–backed securitization. It will analyse and consider possible
effects in order to relieve the pressure currently imposed on the Government Budget. The aim of this research is to identify the outstanding systems
financed by capital market and banking systems in the United States and Chile and suggest how a similar system can be adopted to improve the
National Higher Education Fund Corporation (PTPTN) as main corporation... Show more content on Helpwriting.net ...
This research considers the role of government as a guarantor without burdening its financial capacity. However, the private capital markets and
banking systems will become key players to provide financial resources to students. My study confirms the promising trend in Malaysia after the
introduction other types of asset–backed securities such as lease, auto loans, credit cards receivables and commercial mortgages. This advanced
financial techniques instruments had help to minimized the risk and reduce part of the social problem. Though only spanning over sixth years, the
securitization process and its continuous innovation have contributed to resolving and risk managing problems in Malaysia. SCOPE AND
LIMITATION OF THE STUDY The scope of this research particularly focuses on the student loans problem, which has not been involved yet in
Malaysia. The work considers the characteristics of National Higher Education Fund Corporation (PTPTN), suggests a structure for student loans
securitization, and study the potential of the asset–backed securitization process in resolving the student loan problem. A limitation for this research is
that we will able to focus only on the United States and Chile student loans systems, as that process is not yet implemented very broadly worldwide.
The United States has implemented the federal Family Education Loan Program (FFELP) to provide funds for students.

The Financial Crisis Of 2008
The financial crisis of 2008 was the worst economic disaster since the Great Depression. It caused the collapse, take over, merging, or buying out of
financial services firms and banks such as, Lehman Brothers, Merill Lynch, Wells Fargo, Goldman Sachs, AIG, Royal Bank of Scotland, Fannie Mae
and Freddie Mac. The "Big Three" credit rating agencies, Standard & Poor's, Moody's, and Fitch Ratings, were at the helm of the financial crisis of
2008 because they were all found of wrongly assigning triple– A securities ratings to mortgages and debt assets that were way below "investment
grade" level, which greatly contributed to the growing financial crisis. The ensuing result of the financial crisis of 2008 was the Great Recession, a
period of great economic decline in America and the rest of the world. The financial crisis and Great Recession were triggered by subprime mortgages
and mortgage backed securities, known as Collaterized Debt Obligations (CDOs). Mortgage–backed securities are a form of an asset–backed security
that deals with different type of mortgages, while subprime mortgages are mortgages that are loaned out to people with low credit scores. CDO's are
very complex because they are built into different levels, known as tranches, that consist of various types of assets. The tranches of CDO's are
structured on the basis of risk, with the lowest credit rated tranches holding the highest amount of risk. A demand for mortgage–backed securities and
subprime mortgages

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