Abstract

http://ssrn.com/abstract=2375253
 


 



Risk and Mortgage Backed Securities in a Time of Transition


Harold C. Barnett


Roosevelt University - Walter E. Heller College of Business - Marshall Bennet Institute of Real Estate

November 11, 2013

Prepared for publication in H. Kent Baker and Greg Filbeck (eds.), Investment Risk Management, Oxford University Press, Forthcoming

Abstract:     
The residential mortgage backed securities (MBS) market expanded and collapsed as securitizers packaged increasingly toxic loans into private label MBS. Underwriting of the ability to repay was replaced with new affordability products and expectation of continuously rising home prices. The risk of default was misrepresented by securitizers and credit rating agencies. As a result of the financial crisis of 2007-2008, 90 percent of loan originations are now insured or guaranteed by taxpayers. Public and private investors are seeking compensation through litigation. The Dodd-Frank Act has produced a rigorous ability to repay qualifying standard as well as liability for non-compliance. A lender “skin in the game” or borrower down payment requirement might also be forthcoming. The new rules could substantially reduce the risk of default while excluding many borrowers and first-time homeowners from the mortgage market. An inclusive private label MBS market has not yet emerged.

Keywords: Mortgage backed securities, subprime mortgage, Goldman Sachs, credit rating agencies, financial crisis, Dodd-Frank, qualified mortgage.

Accepted Paper Series





Download This Paper

Date posted: January 6, 2014  

Suggested Citation

Barnett, Harold C., Risk and Mortgage Backed Securities in a Time of Transition (November 11, 2013). Prepared for publication in H. Kent Baker and Greg Filbeck (eds.), Investment Risk Management, Oxford University Press, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2375253

Contact Information

Harold C. Barnett (Contact Author)
Roosevelt University - Walter E. Heller College of Business - Marshall Bennet Institute of Real Estate ( email )
430 South Michigan Avenue
Chicago, IL 60605
United States
Feedback to SSRN


Paper statistics
Abstract Views: 140
Downloads: 40

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 0.359 seconds