Ok so some loan companies have agreed to freeze rates on adjustable rate mortgages. But I don’t understand how this works. Say Countrywide has a loan that is going to adjust to, say 7%, but has agreed to freeze it at say, 5%. The loan itself was packaged up and sold a long time ago to an investor at a rate of return based on the life of the loan. How can Countrywide lower that rate on a security they no longer even own? Who is making up the difference?
Seems simple to me. Countrywide (and others) is telling the security holder that you get paid some or none, what do you prefer. Since this plan was hatched with treasury and probably FED’s blessings to prevent a likely systemic meltdown, what options does the security owner have? At this point, most MBS/CMO/CDO holders will be glad to see any pennies on $. Just recently, ETrade sold a pile for 27 cents on $; that settles the precedent on what such papers are worth. It is all downhill from 27% now.
Seems simple to me. Countrywide (and others) is telling the security holder that you get paid some or none, what do you prefer. Since this plan was hatched with treasury and probably FED’s blessings to prevent a likely systemic meltdown, what options does the security owner have? At this point, most MBS/CMO/CDO holders will be glad to see any pennies on $. Just recently, ETrade sold a pile for 27 cents on $; that settles the precedent on what such papers are worth. It is all downhill from 27% now.
Seems simple to me. Countrywide (and others) is telling the security holder that you get paid some or none, what do you prefer. Since this plan was hatched with treasury and probably FED’s blessings to prevent a likely systemic meltdown, what options does the security owner have? At this point, most MBS/CMO/CDO holders will be glad to see any pennies on $. Just recently, ETrade sold a pile for 27 cents on $; that settles the precedent on what such papers are worth. It is all downhill from 27% now.
Seems simple to me. Countrywide (and others) is telling the security holder that you get paid some or none, what do you prefer. Since this plan was hatched with treasury and probably FED’s blessings to prevent a likely systemic meltdown, what options does the security owner have? At this point, most MBS/CMO/CDO holders will be glad to see any pennies on $. Just recently, ETrade sold a pile for 27 cents on $; that settles the precedent on what such papers are worth. It is all downhill from 27% now.
