Below are the risks associated with Mortgage loans Credit Risk is the risk to earnings from borrowers failure to meet the bank’s contract Interest rate risk to earnings from fluctuation of interest rates in market Price risk is the risk to earning from changes in the values of foreign exchange, equity etc Transaction risk is […]Continue Reading... No Comments.
Securitization is a process whereby assets (e.g. Mortgages) are removed from the bank’s balance sheet and sold to a Third Party. The bank continues to service the assets and maintains direct relationship with customers. The third party then issues Securities to Investors. These Securities are backed by assets purchased from the bank. Investors invest in […]Continue Reading... No Comments.
Term mortgage means the loan provided against the physical asset. Mortgage backed securities are the chunks of fixed income securities which are backed by the physical assets in its early life cycle. First the bank provides the required mortgage loan to the borrower. Now the next step is the schedule of repayment which is decided […]Continue Reading... No Comments.
Fixed rate mortgage A fixed-rate loan is a mortgage that allows borrowers to fully amortize a mortgage by making equal monthly payments of principal and interest for a pre-determined term and a constant interest rate. Interest rates remains fixed throughout the loan period. Do not vary according to the market price Advantage Spread out of […]Continue Reading... No Comments.
The mortgage loan process involves many steps from generating money from the investors to process the loans to the borrowers. The entire process is explained below Origination Processing Underwriting Closing Post Closing Ware-housing Secondary Marketing Servicing Origination: Loan Origination is the first step of this cycle. It is the process by which a borrower applies […]Continue Reading... No Comments.