Well the note may be sold or just the servicing. . . .usually at discounts.
If several notes are bundled together, then it is turned into a security. Generally notes of same quality (similar down payment, underwriting standards) were combined. . . .
Mortgage company offers a certain type of loan and creates hundreds of very similar loans.
Mortgage company packages them together and sells them to an investor that wants that return on their money. The risk is predicted based on the credit rating of the borrowers and other things.
The investor can turn around and “sell” the cash flow that comes out of these payments. That would be a security instrument. That is one of the things that FNMA does.
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Well the note may be sold or just the servicing. . . .usually at discounts.
If several notes are bundled together, then it is turned into a security. Generally notes of same quality (similar down payment, underwriting standards) were combined. . . .
Mortgage company offers a certain type of loan and creates hundreds of very similar loans.
Mortgage company packages them together and sells them to an investor that wants that return on their money. The risk is predicted based on the credit rating of the borrowers and other things.
The investor can turn around and “sell” the cash flow that comes out of these payments. That would be a security instrument. That is one of the things that FNMA does.