Mortgage Backed Securities settlement failures skyrocket 4x in one week. The fact nobody is talking about this is alarming. 2022 looks like 2008. . . For retards:
Basically, a security is an investment. Legally, it's a little vague, but something like a share of stock in a company is a security.
Ok, so when you go to buy a house, you don't have all the money laying around, so you borrow from the bank. That's the mortgage.
When these banks have a bunch of individual mortgages sitting around, they sometimes decide to bundle hundreds or thousands of them into a group. When they sell these, it is what is known as a mortgage backed security. It's a security (which basically just says the SEC gets to regulate the market on which it is sold) backed by the the homes that they are based off of.
The bank gets a lump sum and the investor gets (hopefully) a bigger payoff spread over a long period of time.
So it's like buying stock in a company. You pay for it because your research indicates that your investment will pay off in the future. You buy all these mortgages because your research indicates that enough of those people will pay off the loan in full and make you a reasonable return.
When the housing market became saturated and interest rates started to rise, people defaulted on their loans which were bundled in derivatives. This was how the housing market crisis brought down the financial sector and caused the 2008 Great Recession.
Michael Wood
The investor forked over the cash to buy the security. Their return gets derived from the mortgage payments from all the homes they're based off.
But since everyone's broke and can't pay, they don't, so MBS holders don't get paid. And we've all seen The Big Short and Margin Call..... all these fuckers are leveraged up to their eyeballs. Once one domino falls it's only a matter of time before the others do.
So there's a rush for the lifeboats, whole thing collapses, gg.
Blake Ward
If you haven't sold your stocks and bought into gold or crypto the instant Russia placed an army at the border, it's over for you anyway.
Or silver. And not paper contracts - allocated metals or physical metals only.
Hudson Lopez
It means the people who have mortgaged their properties can't pay off their loan. They default, the loan goes bad and can't be repaid. In theory this means the bank gets the property and can simply sell it off to recover their loss. If what happens in 2008 happens then the housing market crashes, the bank can't get it's money back because nobody will buy and the value crashes through the floor and suddenly the banks liquidity dries up as it has billions in mortgages that won't get repaid and it has thousands of essentially worthless properties on its books it can't sell.
The MBS bit just means the bank bundles up a bunch of mortgages and sells them off like a bond and gives the holder of it the right to collect the interest.
Ethan Carter
Ah, so if it's a liquidity crisis, then we can expect everything to dump then.
Christian Nguyen
It doesn't "fail". It defaults. The person who took it, that is.
The way that your country is structured is that real estate is practically unaffordable unless financial institutions are forced to give out subprime (synonym for not-good) loans. It means that the risk outweighs the payout. The trick here is that your government, uh, I mean private central bank, guarantees the "security". If some colossal fuckup happens the burden of the wave of defaults is not offloaded onto the institution or bank that gave out the subprime mortgages like candy, but onto everyone by having the federal reserve absorb it and then print out trillions to cushion it. Print out trillions -> rapid inflation -> wages would of course not rise as quickly -> $10 a gallon while you're making $15 an hour and paying $2,000 for rent. This leads to economic implosion or adjustment of wages and rapid reduction of productivity and, well, economic implosion.
Benjamin Green
GME holders have been talking about this for a long time but price have not been doing their favor and shf seems are winning against them.
Does failure to deliver do anything ?
Grayson Edwards
but aren't there no shortage of buyers right now and that property they now have to sell is worth even more
Sebastian Moore
where is this information from?
Gabriel Nguyen
That's what everyone thought back in 2007 but it was a mirage because so many people were getting loans they'd never be able to pay off. High demand was driven by reckless lending.
Does this mean there will be a housing market crash and I will finally be able to afford a nice house?
John Phillips
They were never going to be paid back anyway.
Carter Garcia
Because these collateralized debt obligations, CDOs or Mortgage backed securities, were artificially given a triple a rating by AIG. >All these niggers are doing just fine, wtf
Michael Reed
If you can manage to keep your job, sure.
Jaxson Murphy
No. they will print money. Housing will crab or even go up.
Noah Roberts
Oh and you'll need to pay in cash. You obviously won't be getting a loan from any bank, so if you can keep your job and have 300k in savings you're set.
Aiden Clark
>artificially well yes and no MBS have to have similar loans packed in them so the investors can judge the default probabilities and set the price in accordance to risk
CDOs were different becasue they packed highest and lowest investment grades MBS into one product and no one had the knowledge how to judge risk on those so they were marketed as highest grade investment products to sell as much as possible I think there were even CDOs of CDOs just to sell more
Josiah Williams
>Let me tell you about your country
Jaxon Cruz
They can't. Inflation is already going hog wild, printing more money is no longer an option unless the US wants the dollar to drop to Ruble levels.
Dominic Hernandez
Let me tell you about commies.
They want that.
Connor Perry
Prices move because it benefits investors and real estate moguls like it when it goes up Higher prices mean you can leverage harder and you can justify higher rents for bigger cash flow.
Logan Watson
have a you fren
Carson Fisher
These are trade settlement fails, not the underlying security "failing" (defaulting). The video you linked does not explain what this means.
Settlement failures mean that one party already paid to purchase an MBS, and the seller did not deliver it.
This is possible because the MBS market is forward-settling: trades can happen at any time, and the security is actually transferred at a later date (these settlement dates occur 4 times per month).
These failures don't mean that the MBSs aren't paying out or that people are defaulting on their mortages.
