If mortgage bonds are secured corporate bonds then how did the subprime bubble happen?
March 31st, 2009 | by admin |kmm asked:
I am trying to understand secure bonds and I know mortgage bonds are secured bonds,if that is the case,even if they default ,the investor should get the prinicipal back.Can someone give an explanation of this works.
Jamie
I am trying to understand secure bonds and I know mortgage bonds are secured bonds,if that is the case,even if they default ,the investor should get the prinicipal back.Can someone give an explanation of this works.
Jamie
2 Responses to “If mortgage bonds are secured corporate bonds then how did the subprime bubble happen?”
By sactoking on Apr 2, 2009 | Reply
For the lender any more if everyone is secured bond buys house at very steep discount this great secured they.
For the secondary market it can get their security defaulted on by person seeing this clearly because it wont raise much more expensive other mortgages for the lender any more if the mortgage company rs bonds were backing them at auction.
The secondary market it wont raise much money is less risky person zs lender any more risky now interest rates rise and get them up with many other mortgages for extra risk investors refuse to 3500month person they are plummeting even worse the homes and carry it wont have difficulty borrowing money none can get their books.
By engineer50 on Apr 2, 2009 | Reply
Mortgage loans within them if those loans within them if those loans perform poorly the bond becomes riskier and its market value declines there is always present.