43. CFA Level 1 Introduction to Asset Backed Securities LO8 Part 2 | Jabar Post Indonesia

43. CFA Level 1 Introduction to Asset Backed Securities LO8 Part 2 | Jabar Post Indonesia/a> – This time JabarPost.Net will discuss about Mortgage.

The following is 43. CFA Level 1 Introduction to Asset Backed Securities LO8 Part 2. And for those of you who want to find a similar explanation, you can search in the Mortgage category

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43. CFA Level 1 Introduction to Asset Backed Securities LO8 Part 2 | Jabar Post Indonesia

A mortgage loan or, simply, mortgage (/ˈmɔːrɡɪdʒ/) is used either by purchasers of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged. The loan is “secured” on the borrower’s property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property (“foreclosure” or “repossession”) to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning “death pledge” and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure.[1] A mortgage can also be described as “a borrower giving consideration in the form of a collateral for a benefit (loan)”.

Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants, or an investment portfolio). The lender will typically be a financial institution, such as a bank, credit union or building society, depending on the country concerned, and the loan arrangements can be made either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably. The lender’s rights over the secured property take priority over the borrower’s other creditors, which means that if the borrower becomes bankrupt or insolvent, the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first.

In many jurisdictions, it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed. Mortgages can either be funded through the banking sector (that is, through short-term deposits) or through the capital markets through a process called “securitization”, which converts pools of mortgages into fungible bonds that can be sold to investors in small denominations.

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  1. Hi Mark…wanted to know whether credit card receivable securities are common in every country…I am not aware about the credit card policies worldwide however here is the reason why I ask this question…In India, almost 95% of the credit card entities issue free credit cards (hence no issuance fee), 50% no yearly charges (lifetime free cards)…50% cards with yearly charges (approx average yearly charges INR 1000 per card) – very small amount in the comparison with the limits that are issued…Now when a customer utilizes his/her limit, the bank pays the seller upfront and collects it from the customer with no additional charges if the customer pays the full amount within stated billing cycle (In India)…In this case the bank looses the opportunity of earning on the funds that are tied up within a billing cycle…I do agree that not all customers make full payment but the portion not doing it is lesser in comparison to the one doing…We still get good revenue from the section paying interest and other charges but those are relatively lower in terms of percentage of the total funds tied unlike mortgage or other loans.

    All my stats are based on credit cards issued to retail sector for one of the leading private sector bank in India…I have not included Corporate cards.

    All I meant from this is, in my country the cost of securitizing credit card receivables will be almost equivalent to direct interest & other earnings from the same. Why do so much for such less margin?

    Apart from my above query, when we say credit card receivables securities , does it (pool) include both Retail + Corporate? If so, then is the pool combined or separate?

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