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The Securitization Markets Handbook

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The Securitization Markets Handbook

Structures and Dynamics of Mortgage - And Asset-Backed Securities

Bloomberg Press,

15 min read
10 take-aways
Audio & text

What's inside?

Corporate finance relies on securitization, backed by assets from home mortgages to shiny new cars on the showroom floor.

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Editorial Rating

6

Qualities

  • Applicable

Recommendation

Authors Charles Austin Stone and Anne Zissu’s treatise on asset-backed securities is part handbook and part textbook, including technical charts, graphs and formulas. Both finance professors and Ph.D.’s, the authors are the founding editors of two financial quarterlies, The Financier and The Securitization Conduit. As you might expect from authors with their expertise, this book thoroughly covers the structure, dynamics and characteristics of various asset-backed securities. You might pick up the book to learn about the precise details of these instruments, or to refresh your memory for the fine points. It carefully explains how institutions package bond-type products for investors based on funding from different assets, such as mortgages or credit card payments. The authors fulfill every reader’s wish for comprehensiveness, although they place a good deal less emphasis on style and readability. Even specialists will find this a challenging read, though it is an information-packed reference book. getAbstract.com believes it is useful and appropriate for professionals who need to know the technical details of particular market structures.

Summary

Mortgage Securitization

The payment flow for asset-backed and mortgage-backed securities comes from pools of mortgages or other credit assets. The issuance of these securities has experienced phenomenal growth. A decade ago, asset-backed securities (ABSs) and mortgage-backed securities (MBSs) were exotic and illiquid. No longer. Now they are cornerstones of the financial markets.

The process of pooling loans and turning them into securities brings the banking and securities markets together. Take, for example, mortgage-backed securities. Financial institutions make mortgage loans, bundle the loans into pools and sell the pools to various government-sponsored enterprises (GSEs), such as the Federal Home Loan Mortgage Corporation (Freddie Mac), the Federal National Mortgage Association (Fannie Mae) and the Government National Mortgage Association (Ginnie Mae).

These GSEs establish real estate mortgage investment conduits (REMICs) that issue various categories, or "tranches," of securities. These securities have different payment characteristics, depending on the degree of the market’s demand for the various investment products that the GSEs’ financial engineers...

About the Authors

Charles A. Stone, Ph.D., is visiting professor of finance at Université Paris Dauphine. Anne Zissu, Ph.D., is professor of finance at Temple University in Philadelphia. They are the founding editors of The Financier and of The Securitization Conduit.

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