1. Financial Institutions and Markets FIN 304 Dr. Andrew L. H. Parkes Day 9 “How do financial markets work?” 卜安吉

2. Dec. 29, 2009Financial Institutions & Markets, Day 92 Chapter 11: Mortgages For the Midterm Exam: Make sure to study mortgages!  Be able to calculate a payment on a conventional mortgage  See Example #1, p. 316  Know how to do the “ Discount Points ” calculations as done in PPT and in class – see notes 12/27 Home Mortgages

3. Dec. 29, 2009Financial Institutions & Markets, Day 93 Chapter 11: Mortgages continued Make sure to study mortgages!  Fixed rate mortgages vs.  ARMs – What are they?  Other types – pp. 319-20  What is “ Loan Servicing? ”  Explain the Secondary Mortgage Market briefly! Home Mortgages

4. Dec. 29, 2009Financial Institutions & Markets, Day 94 Chapter 11: Mortgages continued Make sure to study mortgages!  Define Mortgage Backed Security  Be able to discuss what the three U. S. agencies do and their names:  FNMA – 1934  GNMA – late 1960s  FHLMC – late 1960s Home Mortgages

5. Dec. 29, 2009Financial Institutions & Markets, Day 95 Chapter 11: Mortgages continued Pass Through Securities too!  What is a Pass Through Security?  GNMA Pass-Through  FHLMC Pass-Through  CMO – Collateralized Mortgage Obligation – KNOW THIS ONE!! Money, money MONEY!

6. Dec. 29, 2009Financial Institutions & Markets, Day 96 Chapter 11: Mortgages continued What is a Securitized Mortgage?  See page 327  What are the “ benefits? ”  Side effect? Housing in the U.S.

7. Dec. 29, 2009Financial Institutions & Markets, Day 97

8. Dec. 29, 2009Financial Institutions & Markets, Day 98 "If you were alive, they would give you a loan. Actually, I think if you were dead, they would still give you a loan." STEVEN M. KNOBEL, a founder of an appraisal company, on lax lending standards at Washington Mutual. … STEVEN M. KNOBEL, From October 2008 Financial Crisis Fiasco