Why might an interest rate derivative such as an interest rate swap or interest rate cap be used in a securitization transaction for residential mortgage loans?
Answer to relevant QuestionsWhy is a shifting interest mechanism included in a securitization where the collateral is residential mortgage loans? When will a mortgage servicer not advance payments for principal and interest? Answer the below questions. a. What is an option ARM loan? b. Why is it unlikely that this loan type will be originated in the future? In a commercial mortgage-backed security, what is the concern that the bondholders have when there is a prepayment premium paid by a borrower? Why is it important to look at the dispersion of property types and geographical location of properties in analyzing a CMBS transaction?
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