Example collocations logo

Mortgage in sentence

506 examples of Mortgage in a sentence

Securitization – putting large numbers of mortgages together to be sold to pension funds and investors around the world – worked only because there were rating agencies that were trusted to ensure that mortgage loans were given to people who would repay them.
So how does this explain the overexposure of many institutions to sub-prime mortgage risk and the collapse of the interbank market?
After all, managing for the short run encouraged mortgage lenders to offer artificially low “teaser” interest rates to lure potential homeowners.
Such a statement would have been unthinkable in the years before the sub-prime mortgage meltdown.
It would not have protected European and other nations from becoming awash in toxic mortgage assets exported from the US.
Moreover, the final legislation will likely lower the federal deduction for mortgage interest and eliminate deductibility for state and local taxes.
Read More from "Zone Defense"Guns, Drugs, and Financial MarketsCAMBRIDGE – The sub-prime mortgage crisis has demonstrated once again how hard it is to tame finance, an industry that is both the lifeline of modern economies and their gravest threat.
Indeed, the financial crisis has worsened in recent weeks, reflected in the US Federal Reserve’s takeover of quasi-government mortgage lenders Fannie Mae and Freddie Mac – which may cost American taxpayers hundreds of billions of dollars – as well as the bankruptcy of Lehman Brothers and the sale of Merrill Lynch.
Ultimately, these financial failures reflect the downward spiral of house prices and the increasing number of homes with negative equity, i.e., with substantial mortgage debt in excess of market values.
The growing gap between mortgage debts and house prices will continue to increase the rate of defaults.
Many homeowners who can afford to make their mortgage payments will choose to default, move to rental housing, and wait to purchase until house prices have declined further.
Botched efforts at mortgage restructuring, failure to restore credit to small and medium-size enterprises, and the mishandling of bank bailouts have all been well documented, as have major flaws in forecasting both output and unemployment as the economy went into free-fall.
Previously, private investors in the US simply did not lend to mortgage seekers whose credit history was below prime.
Reducing the face value of mortgages and providing the upside – in case home prices were to rise in the long run – to the creditor banks is another way to convert mortgage debt partly into shareholder equity.
It is surely the case that the banks, along with rating agencies, mortgage underwriters, investment banks, and others, engaged in unsavory practices.
Indeed, in its 2006 annual review of the US economy, the IMF was extraordinarily benign in its assessment of the risks posed by the relaxation of lending standards in the US mortgage market.
It noted that “borrowers at risk of significant mortgage payment increases remained a small minority, concentrated mostly among higher-income households that were aware of the attendant risks,” and concluded that “indications are that credit and risk allocation mechanisms in the U.S. housing market have remained relatively efficient.”
Likewise, the problem was not mentioned in one of the IMF’s flagship publications, the Global Financial Stability Report (GFSR), in September 2006, just ten months before the sub-prime mortgage crisis became apparent to all.
Moreover, “the US housing market appears to be stabilizing....Overall, the US mortgage market has remained resilient, although the sub-prime segment has deteriorated a bit more rapidly than had been expected.”
Suppose that the vulnerabilities piling up in the US mortgage market – right under the IMF’s Washington-headquartered nose – had taken place in a developing country.
Falling asset prices in other financial market segments, following the sub-prime mortgage meltdown in the United States, may be more important for explaining the recent surge in food prices than supply constraints or other factors underlying longer-term gradual upward price trends.
It has almost doubled, to 180%, in the Netherlands, where the average mortgage is 110% of home values, because lenders are happy to finance all the purchasing costs.
In the UK, by contrast, the biggest penalties have come in the form of compensation payments made to individual mortgage borrowers who were sold Payment Protection Insurance.
Under the auspices of the government-sponsored enterprise (GSE) Fannie Mae, Stiglitz published a paper in 2002 arguing that the chance that the mortgage lender’s capital would be depleted was less than one in 500,000, and in 2009 he called for nationalization of the US banking system.
With the eurozone banks also deeply implicated in the subprime mortgage mess and desperately short of US dollars, America and much of Europe began a remorseless slide into recession.
Their ill-conceived interventions – notably the US-backed mortgage underwriters Fannie Mae and Freddie Mac, as well as the Community Reinvestment Act – distorted market incentives.
Mortgage traders in London – not many of whom were Swiss – took on enormous risks that almost brought down UBS.
But the main concern centers around the Treasury’s apparent intention to pay more than double the current market price (20-30 cents on the dollar) on the premise that its success in untangling the mortgage market would make any discount seem like a bargain.
As some confidence returns in an eventually recapitalized banking system, and long bond yields decline with the fall in inflation, mortgage and other borrowing rates will fall and monetary transmission mechanisms will revive, supporting economic activity and stabilizing real house prices, albeit at a substantially lower level.
It helped bail out Bear Stearns, the government-backed mortgage lenders Freddie Mac and Fannie Mae, and the insurance giant AIG.
BackNext