Yes but why funds have nothing to do with the assets you name also c

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After the last entry posted on the mortgage crisis I got a big question about why many investment funds had been ruined. For that reason I set to work to investigate who was behind all this. I have to admit that when something happens not because I give many turns until I get the answer. Well, fortunately for my occasional reading manual that I have on my shelves, chartwells food service find the answer to what I was looking chartwells food service for. For that reason I would like to share with you, in case some kind soul could develop more so for now I can make out. Well, the reason that many funds have been dogged by the American mortgage crisis is a concept called mortgage securitization as the name is fine, until it interesting ... Ultimately what's behind chartwells food service all this? The mortgage securitization is widespread in United States proof of this is that in 2000, over 50% of the volume of outstanding mortgages are securitized, while in Europe only represents 1% of the total. Mortgage loan originators have various alternatives, keep that loan portfolio, sell it to a third party or using this loan along with others who have to form a fund (called pool) of mortgages and use it as collateral for bond issues. chartwells food service When a mortgage is used as collateral, ie as collateral, in the issuance of securities is said to have been securitized, these titles are called Mortgage Backed Securities chartwells food service or MBS. These financial products are an alternative to fixed income securities more traditional, but unlike conventional bonds, it is not known how it will produce cash flows (cashflows), to be the possibility of prepayment of these mortgages. there are different types of MBS but the most used and titles are simple pass-though. After all this information we will see an example and understand why these funds have gone to hell. Imagine chartwells food service that a U.S. bank has 100 mortgage loans, each of $ 100,000, each with an interest rate and each with specific interests consist flows, amortization and prepayments possible. Now suppose that in this case 100 BNP Paribas buys these mortgages and the board in a pool. This set of loans can be used as collateral for the issuance of securities in which the cashflows that flows originate reflect the different loans that make up the pool. Thus, BNP creating 1,000 units so that each would be worth $ 10,000 chartwells food service ($ 10 million divided by 1,000) and receive the cash flow generated by the set of loans, thereby paying get different coupons each Fund participate . All this runs smoothly, because when any of these mortgage loans are purchased overcomes others and so on. But what happened this time, that these subprime mortgages that were much more attractive in that they had a much higher interest rate, are the first to fall quickly to any tremor. Therefore, it has happened with these types of funds, and why many have left to contribute. Well the answer is simple, many of these funds had bought subprime mortgages as investment mode, now as the holders of these mortgages can not deal with payments, or to the bank that bought them has broken, the issuer of such funds can not make the payments. Therefore, many are no longer out of the market and dragging away many investors who had put their money. Well, I hope I have clarified some doubts, I admit that I was a subject that intrigued me and I've been met with this. I must admit it was a type of funds and did not know if anyone chartwells food service has attended one, has been "caught" by the crisis, or know more about the subject and wants to further develop what is said in these lines, I'd appreciate much, since the purpose of this blog is to learn day to day experience of all.
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Yes but why funds have nothing to do with the assets you name also c