SECURITIES ARBITRATIONS INVOLVING MORTGAGE-BACKED SECURITIES AND COLLATERALIZED MORTGAGE OBLIGATIONS: SUITABLE FOR UNSUITABILITY CLAIMS?
In: Fordham Journal of Corporate & Financial Law, Jg. 14 (2009), S. 251
Online
academicJournal
Zugriff:
I. Introduction and Background Over the past two years, the world has witnessed the unfolding of the "subprime mortgage crisis". A steep rise in home foreclosures beginning in late 2006 caused a ripple effect throughout the economy, resulting in a dearth of liquidity across the lending sector. The largest rise in defaults occurred on so-called "subprime" 1 and other adjustable rate mortgages (ARMs). 2 These types of mortgages were offered initially during a time of rising housing prices, often to unqualified borrowers, 3 who thought that they would later have the opportunity to refinance at more favorable terms. As housing prices declined, however, refinancing became more difficult; defaults increased sharply as interest rates reset at higher rates on many of the mortgages. 4 These events contributed to approximately 1.3 million foreclosures in 2007, an increase of approximately 75% from 2006. 5 Foreclosures increased to 2.3 million in 2008, an increase of approximately 80% from 2007. 6 Some experts have estimated that subprime defaults ultimately will reach between $ 200 billion and $ 300 billion before the crisis ends. 7 Mortgage lenders and banks - which maintained the mortgages on their balance sheets, and thereby retained the credit risk - suffered the first losses. Other financial institutions avoided large losses, however, by passing along the credit risk to investors through securitization of the mortgages into mortgage-backed securities (MBSs) and collateralized mortgage obligations (CMOs). These investment products, in turn, were purchased by retail and institutional investors, often ...
Titel: |
SECURITIES ARBITRATIONS INVOLVING MORTGAGE-BACKED SECURITIES AND COLLATERALIZED MORTGAGE OBLIGATIONS: SUITABLE FOR UNSUITABILITY CLAIMS?
|
---|---|
Autor/in / Beteiligte Person: | Bondi, Bradley J. |
Link: | |
Zeitschrift: | Fordham Journal of Corporate & Financial Law, Jg. 14 (2009), S. 251 |
Veröffentlichung: | 2009 |
Medientyp: | academicJournal |
Schlagwort: |
|
Sonstiges: |
|