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Subprime Mortgages And The Mortgage Crisis

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Mortgage securities are crucial when it comes to the availability and cost of housing in the United States. This paper will analyze the mortgage securities market, and how the market functions. It will also focus on the subprime mortgages created from 2000 to 2006. Suggestions will be presented that would protect against the types of problems experienced in the mortgage securities market from 2006 through 2009.
Mortgage securities are considered an ownership interest in mortgage loans made by mortgage companies, commercial banks and other private entities to finance the borrower purchase home or other property. Mortgage securities were created when the servicers pool loans for sale to investors. The investors receive payments of principal and interest when mortgage loans are paid off by homeowners.
Investors in the secondary market often purchase mortgage securities after they are issued. Large institutions make investments in mortgage securities when they are issues. Other dealers in a secondary market sometimes redistribute securities.
Mortgage securities are issued by the Government National Mortgage Association (Ginnie Mae), or by government-sponsored enterprises (GSEs) such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (Freddie Mac, 2002).
Mortgage securities are often priced at a higher yield that corporate or Treasury bonds. The opportunities for profit are also greater. Mortgage

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