Mortgage-Backed Securities I

[buytoletlandlord]

great mortgage video guys

[helloworld0714]

thank you for this video. this is really a great help for my research

[buytoletlandlord]

great buy to let mortgage video

[parthvatsal1]

That's me!! I still exist!!

[fakeymailfakey]

Of course I'm extremely wealthy, haven't you seen my hat?

[neurogence]

Eliminate mortgage backed securities. Without your knowledge your money has been taken over and sold. Using a home to gamble is a wrong idea

[smurfieboo]

you lost me at the end

[mortgagecalculator2]

Love this video

[heyathere1000]

smart

[KevinSlasHr]

For kids who have crappy abstenee ignorant teachers at college (especially in the 3rd world) YOU ARE A GOD !

[RebelHQ]

wow, thanks.

This is so clear :]

[pttugasuk]

The Wisdom Companies is a premier provider of online marketing services. The company streamlines the client acquisition process by matching targeted consumers with service providers. Since 2002, Wisdom has connected over one million motivated consumers with financial services firms in the mortgage, insurance and credit industries. CALL TODAY 877-291-4645 FREE

[capecoralrealestate1]

I still confused...but its what makes the world go round..right?

[giac01]

3:33 "And you have a hat" aha did anyone else think this was really random?

[TohaBgood2]

Khan sounds genuinely excited to talk about financial markets :D You can feel the latent hedge fund analyst in his voice :DD

[cmbrk]

oversimplified

[philipjterry]

@cmbrk for a good reason...

[Zander101084]

@cmbrk oh yeah, I don't see any videos from you. asshole

[Zander101084]

@cmbrk common, give me a better explanation. I dare you to try.

[thetruephilosopher]

Thank you very muck for explaining how mortgage-backed securitiy works. You rock!!

[Gastogh]

@ZzzVvvYyy:

It might not be the best of comedy, but I lol'd all the same. Thanks for that. xD

[ThyHolyHandgrenade]

Sal, you mention first that the loan is an interest-only loan (don hav to pay principal), but then you go on and pay the 1m (principal amnt) at the end of year 10. Isn't this contradictory to ur earlier assumption?

[TohaBgood2]

@ThyHolyHandgrenade What he means is that you don't have to pay off a part of the loan principal alongside your interest payment every month. You just pay it in bulk at the end. Normally you pay the 10% interest plus some percentage of your loan. In which case at the end of your term, you don't have any principal to pay.

[kn53535]

@ThyHolyHandgrenade i think all loans require a prinicipal repayment but i think what sal is supposing in this example is that the borrower is only paying the interest during the course of the ten years and the prinicipal repayment at the end (just to make the maths a bit easier)

[dandreoli1973]

Mortgage Backed Securities are not sold by investment banks. They are sold by the government sponsored enterprises (GSEs), Fannie Mae, Freddie Mac, and Ginnie Mae. GSEs purchase mortgages from lending banks.

Investment banks also purchase mortgages, and (indirectly) sell securities backed by them (through SPVs), but these are called collateralized debt obligations (CDOs). The SPVs either buy the mortgages or sell mortgage default insurance (CDS). Either way, investors purchase CDOs from SPVs.

[TohaBgood2]

@dandreoli1973 He's oversimplifying for the less financial-market-savvy students. There's a video where he talks about this in slightly greater detail.

See "Housing Price Conundrum (part 3)"

[dandreoli1973]

Mortgage Backed Securities are not sold by investment banks. They are sold by the government sponsored enterprises (GSEs), Fannie Mae, Freddie Mac, and Ginnie Mae. GSEs purchase mortgages from lending banks.

Investment banks also purchase mortgages, and (indirectly) sell securities backed by them (through SPVs), but these are called collateralized debt obligations (CDOs). The SPVs either buy the mortgages or sell mortgage default insurance (CDS). Either way, investors purchase CDOs from SPVs.

[pauli3100]

Hey just a quick question. On the first half of your presentation when you finshed paying the Ballon Pymt loan of 1M dollars your total was 1.1M after 10 years of intrest. Isn't it 2M after ten yrs of intrest plus the principal. Thanks.

[djancak]

@pauli3100 i noticed that too. would be good to get some video notes up there to indicate this mistake

[bookofelifan1]

@pauli3100 that wasn't his total. that was the final year payment, 100k interest + original 1M loan = 1.1M

[FallofDarkness55]

@bookofelifan1 so i'm guessing you take the 10% and multiply it by the 100k per year times 10 and then add that number to the 1M loan to get 1.1M dollars. am i right?

[bookofelifan1]

@FallofDarkness55

Put simply, you pay the 100k interest for 10 years and then in that 10th year ALSO pay back the original 1M loan. The only reason 1.1M is mentioned is because the author was going thorugh interest payments per year, the final year consisting of interest and capital sum. Interest of 100k + capital of 1M = 1.1M

the other 9 years: 100k x 9 = 900,000k

900,000 + 1.1M (final year payment) = 2M

[FallofDarkness55]

@bookofelifan1 thanks. i understand it now.

[alfars4ever]

thank you very much, very informative

[mortgagecalculator22]

Mortgages and mortgage information in this day and age is so damn important for people who want to buy a home

[spectrum0590]

Great insight! Like your presentation.

[tcf909]

What did you use for your screen capture? which software? thanks!

[auctionmusic]

Bank mortgages should be outlawed...illegal.

A mortgage should be setup such that the monthly interest is 1/2 the payment, and the other half is the principle. If you can't afford it, then no loan....no house...no soaring house prices...people can now afford homes, and they can pay them off much sooner...The current structure of banking causes prices to soar, and you wind up trapped in a 30 year debt...the current structure is a complete and total ripoff..its criminal!....

[ifginc]

It is always best to own a home than spending every month on rent. Get easy and flexible home mortgage from the fast and reliable services of Integrated financial Group.

[jmm5149]

"Another person, you. And you have a... you have a... a hat."

[smokenfly514]

Why would the investment bank buy the mortgages for $1B when many people will default and won't be able to make their payments? And why does he say in the next video that investors would be willing to buy it for $1.1B?? Even if all debtors come up with the money to pay, you will make 0 profit. Am I just getting something wrong

[Echelon2600]

"When, through the process of law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of the government applied to a central power of imperial wealth under the control of the leading financiers."

-Excerpt from the Banker's Manifesto of 1892

[Echelon2600]

...and when you create that much money out of thin air by fraud in factum and fraud in inducement, via contracts that are void ab initio, it's only a matter of time before it all collapses.

[Echelon2600]

...not to mention the fact that they sell the worthless copies and pass them around like a whiskey bottle at a frat party. Most homes are paid off in full 10x over before you ever set foot in the door. And who created all the money and value? You did - when you signed the note.

[Echelon2600]

A copy of the note is worthless because it has no wet-ink signature of a living soul upon it to give it value, but the banks still use them to foreclose. It's fraud to the core, and I'm not guessing at the facts here. I just proved it in district court.

[Echelon2600]

Therefore, they loaned you no money, but fraudulently purported that they did. YOU created the loan and got no contractual consideration, and they took no risk. Also, they have 20-30 mortgage default policies, so when you default they get paid off 20-30x what your home is worth, hence the system intentionally designed to fail.

[Echelon2600]

Unless I happened to miss it, there's a critically important piece of mortgage-backed securities that you missed - the fraudulent piece that caused the global financial crisis and bank bailouts. When you sogn a promissory note, your signature turned a piece of paper into a valuable instrument. The bank takes that instrument and enteres it as a deposit on its books.

[slate84]

or you could go to mortgage-sweeps com

[ArizonaMortgageMan]

That's a nice job of explaining MBS. I also like the way you made the presentation.

[whitefly1]

Your example is wrong.

[felipeossa]

I like teenage-backed securities more than mortgage backed ones. Check out "Genius Trust."

[thegoonist]

anyone know why we cant just pay the developer of the property directly (in installments)? why go to the middleman (the bank), obtain a loan, pay the developer, then pay the bank the interest?

[financialservices123]

Awesome video - you can see more of this at imageron (dot) com

[medoazouz]

I think why the mortgagor bank doesn't do the whole process rather than pass it to the investment bank is because it wants to make the mortgage under a separate entity that has its own credit rating, so the rating will be higher than the mortgagor rating itself. Am I right?

thanks

[maskware]

there is a mistake in your presentation, $1M at 10% means you have to pay $1.1k. If you make a credit on 10 years it means each year you have to pay 110.000$

[netbasis]

NetBasis and cost basis reporting on Money For Breakfast...new tax legislation in 2011 - you will all be accountable for accurate cost basis reporting

[gabriellamariee]

YOU ARE THE BEST !

[kgmahabir]

I LOVE YOU!!!!!!

[speculatorMan]

in the beggining sal says that you will pay $100k per year, so in 10 years it will result in $1M

shouldn't it be $110k per year to result in $1.1M in the end of those 10 years?(110k x 10 = 1100k)

[thegoonist]

@speculatorMan yea thats what i thought too...can someone clarify?

[yowmer]

@speculatorMan not really. What Sal is saying is that when you take out an interest only mortgage you don't pay any of the capital back until the end of term (which in this case is 10 years) and so every year you pay back the interest on the $1m that you borrow which is $100k. This means you pay back $100k every year for the 10 years but then at the end of the term you still need to pay the amount you originally borrowed so the payment in year 10 is $1m + $100k. Hope this helps.

[thegoonist]

@yowmer WTH?! so with most of these housing loans the total sum you end up paying is like what....TWICE the principal? (100k X 10 + 1M = 2M?)

[asarualim999]

not first

[djlohan1]

could i be secound bank for 2 minits and ream about these billions of dollarsssssss....aaaaaaaaaaaaa

[donni2121]

wow thats great! thank you very much

[ed1962]

Just wrote up 4 pages of notes>>>Watched these videos>>>Re-wrote the lot.

shiiiiiiiiiiiiiiiiiiiiiiiiit. thanks so much.

[chubbychilli]

A milllion from ur uncle!!! I WISH! :)

[francbiya1]

man i like your stuff is great.

[DeanWegner]

Nice!!!!

[2fuck2shit2]

What is the Key disfavors by Having Your Mortgage

realmortgagepaid.blogspot. com

[Lunatic4ever]

really loved this one,great thing bro

[Lukeeeeo]

and you..you..you have a hat.

[ZzzVvvYyy]

"This is the bank, and they have the money."

[MrMortgage1]

this is crap

[hakker2002]

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

[ssalavei]

Khan Academy rocks! Better than MBA program!

[hyylo]

MBA are useless. just get a finance qullification like FCA.

[talal143]

Wow, is that how they call it now? FCA? not CFA?

maybe MBA is useless, but you definitely need one!

[hyylo]

lol. you got me :P

i was sending this message from my mobile. i mixed up the words.

i dont need a MBA. i make 60k a year :P

[talal143]

Is this before or after taxes :P

FYI, MBA is not only about Finance, it's a combination of marketing, management, and finance :)

[hyylo]

Employers what to employee people who are focused in particular fields. Only do a MBA if it is required by the employer.

ACCA is a brilliant course. I wish I could do a CFA but its tooooo hard. The pass rate for CFA worldwide is about 40 percent.

If I had a CFA I could make 100k a year.

[mikeatEMEco]

@ssalavei it’s certainly cheaper

[candypp87]

great video!

[Lukeeeeo]

Greate video. But wouldn't the investment bank pay more than $1 billion? Otherwise the 1st bank wouldn't benefit. So $1billion plus the interest plus fees.

[elieone]

thank you so much,

it's a good thing you try to educate your american fellows

[addrriannna]

Thank you! Very educational!

Keep it up!

[robho51]

I love you, the presenter

[fctorino]

Good show, Sal! Thanks a trillion!

[raecheltigner]

Well done, Sal. Wish we could see your face.

[mannyfeseha]

thehelpfund.blogspot

[DrewDownsManagement]

Very informative video. I took some notes on the video and how it was done. I gave it 5 stars. Check out our vids and tell me what you think? We have some good stuff also.

[cedarfair920]

Ha ha. "This is you, and you have a hat..." :)

Thank you so much Sal!!

[kirbyman1kanden7pf]

wow well done

[thomsonthayil]

This is awesome, and extremely helpful presentation. The blackboard images and colors used stays fresh in the mind. Thank you Sal for these valuable videos!! God Bless you

[Furiouz7]

well all i have to say is your amazing =) at this

[olamackiewicz]

hello, we are Kasia and Ola, we would like to say that you are an excellent lecturer and we appreciate it that we can learn more thanks to you. Would you please provide us with some video on caps and floors and fras. Many thanks.

[dhamijaneeraj]

Thanks a lot Sal for this video. I have gone through whole series of Mortgage back securities and really its amazing. The best part is that is really good for beginner like me who doesn't belong to finance background.

I am a software engineer, but is eager to learn about finance/Accounting in detail.

Really i havent seen this type of detail information explained in such simple manner anywhere.

Again thx a lot.

[shiv86]

This video did not load for me as well

[steelingmonroe]

Can you please put this video back up?

[mlincoln7783]

Awsome, moves quickly and easily understood

[lilnev2000]

Great work. I added your presentations on mortage backed securities and CDO's to my blog post on CDO's. I'm curious as to what program you use to do the "blackboard" stuff.

[DeathByLight]

i think he used Ms Paint and Camstudio to make the presentation. Great work though

[L1John]

good stuff. funny and educational. saw your CDO video first. had to laugh. the fallacy of man. done really well. thanks a lot.