Chapter 22, 23 discussion

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Question 1:

Read the textbook, name the four major classes of mortgage-related

securities.  As an issuer, explain the reasons for choosing one type
over another. Please elaborate by expressing your thoughts about
your findings in at least 5 – 6 sentences.

Student 1:

The four major classes of mortgage related securities are as of the

following:

 Mortgage-Backed Security: Just like what is mentioned in the

name of the mortgage, it is backed by the collateral of the asset or the
property. Mortgage backed security issued mortgage securities that is
backed with the property as lien against the borrower.

 Mortgage Pay Through Bonds: A hybrid between the mortgage

backed securities and the mortgage pass through securities. It is a
hybrid security with issued against a mortgage pool. A mortgage pay
through is also considered the debt obligation to the issuer.

 Mortgage Pass-Through Security: It is a purchase of shares of a

pool or collections of mortgages. The cash flow from the pass
through is to the security holder as monthly payments. More in a
secondary market situation.
 Collateralized Mortgage Obligations: It is bundled mortgages
sold as an investment by others. Organized and characteristic by risk
levels.

I would like to have mortgage backed security if the property is

considered highly valuable in term of future market cost. This is riskier
if a single property over a diversified pool more like the three others.
The pass through entities that have a pool of bundle attached usually
have less risks than a single mortgage backed security due to
diversification. If an entire zip code appears to be in excellent
condition, it might be a good idea to have the pool of less risky and
secondary market investor with lower potential returns in exchange.

Question 2:

Please visit the Penny Mac Broker Direct at

https://www.pennymacbrokerdirect.com.  Explore the site.  Identify
resources that may be of use to real estate professionals and share it
with class.

Student 2:

PennyMac is a national wholesale mortgage lender. PennyMac serves

as the middleman between the mortgage borrowers and lenders. Its
business is consistent, engaged and transparent. PennyMac provides
a range of innovative solutions to help the brokers grow the business.
The company provides competitive products and prices in several
categories, such as VA, FHA and Conventional.

Its website only offers simple information about its business, special
features and short introduction of the business. A user or broker
needs to register to be contacted by an agent. A company can
become a PennyMac partner or a broker. A POM will be working with
the broker to grow the business. As a potential broker working with
PennyMac, you can register and signon using the Power login. The
website lists the paperwork turn around time.

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