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What is RMBS (Home Loan Mortgage Securities)?

Time: 2014-07-22         Source: Rong 360 finishing         Author: Han Ping
        In order to diversify the risk of loans faced by financial institutions in issuing mortgage loans, a common international method is to implement securitization of mortgage loans. The so-called mortgage securitization is to convert the mortgage loans issued by financial institutions into mortgage-backed securities (mainly bonds), and then sell them to market investors in the capital market to finance funds and make the risks of housing loans. The dispersion is borne by many investors. In essence, the issuance of mortgage-backed securities is a kind of credit transfer behavior issued by a mortgage lender, that is, the loan issuer transfers all the rights of the home loan borrower to the securities investor. Mortgage-backed security (MBS), the borrower's monthly repayment cash flow, is the source of income for the security. Mortgage securitization is just one form of asset securitization. Asset securitization is a big trend.

 

      

Caption: The third line of asset securitization is the combination of the first two lines. The bank is still the lender to the left and the investor is replaced by the right. The investor also faces the bank directly from the borrower (the first line). Three lines). In the process of asset securitization, the role of the bank is crucial. It takes out part of the loan assets to set up an asset pool, and issues bonds to investors on the basis of the asset pool. Since this part of the assets has been sold (not on the balance sheet, it satisfies Barcelona). The requirements of the agreement), so that the bank does not occupy the bank's capital, there are gains; and investors can get higher returns (higher than deposits, but at risk). In the end, everyone is happy (until the financial crisis).

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