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Mortgages are a manufactured product (2022)

bitsaboutmoney.com

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Re: Mortgages are a manufactured product (2022)

#51

Post by ilya_m »

globular-toast wrote: post #47
ilya_m wrote: post #42

Earlier quoted context omitted.

> it is still right to say that money is created when a mortgage is issued if that mortgage is backed by large investors. Is it? Since the house seller wants to have cold, hard cash (or, these days, an incoming wire transfer, which still counts as M1), the large investors need to cough up that much money to make the transaction happen.

Houses are bought in a chain, though. In a chain there might be only 1/10 people taking the cash out.

First, ~10-20% of residential home sales are new (the proportion swings widely year-to-year), with a non-trivial fraction of their costs going to materials and labor.

Second, 5-6% of the typical sale go toward the agents and closing costs. Again, this is money that leave the system.

Third, if some of the sale proceeds are applied to repaying an existing mortgage or to finance a home purchase, this is neutral as far as the "investor-backed mortgages create money" argument goes.

Re: Mortgages are a manufactured product (2022)

#52

Post by bitschubser_ »

sanxiyn wrote: post #22

I know this post is about money, but I want to talk about electronic flow meters than money so I will. The description of "Japanese company making the best electronic flow meters" strongly suggests it is Keyence. They are the best indeed. Keyence is the 3rd largest Japanese company by market capitalization, next to Toyota and Japan's largest bank (Mitsubishi). Larger than Sony, larger than Nintendo, larger than Honda…

Uhhh this highly depends on the industry… for industry grade flow meters Endress+Hauser or Emerson are actually the first that come into my mind

Re: Mortgages are a manufactured product (2022)

#53

Post by twoodfin »

forgetfreeman wrote: post #24
djbusby wrote: post #17

Earlier quoted context omitted.

What's the crime? Mortgages? I'm not following you. Some generational wealth theft somehow?

I'm guessing this is in reference to the first shitheads to decide manufacturing synthetic investment instruments backed by home mortgages was a good idea?

The article explains why, yes, it was a good idea in the context of the US banking system.

Re: Mortgages are a manufactured product (2022)

#54

Post by JumpCrisscross »

Joel_Mckay wrote: post #41
blackhawkC17 wrote: post #39

Earlier quoted context omitted.

It’s usually people with the least financial knowledge that rant the most and lie a lot too. Suddenly, mortgages have become a bad thing..

"Like everything else, it started off with great intentions" https://financialpost.com/financial-times/how-bonds-ate-the-... ..and people like you... easily swayed by sycophantic idealism, and irrational greed. Have a wonderful day, and please refrain from resorting to straw-man arguments and slander if you are feeling upset by facts. =3

You’re both wrong. I’ve worked with some of the people who invented these products and still had to double check your reference to make sure I was correct. I was—Milken didn’t popularise mortgage securitisation. Ranieri did.

Re: Mortgages are a manufactured product (2022)

#56

Post by cushychicken »

sanxiyn wrote: post #22

I know this post is about money, but I want to talk about electronic flow meters than money so I will. The description of "Japanese company making the best electronic flow meters" strongly suggests it is Keyence. They are the best indeed. Keyence is the 3rd largest Japanese company by market capitalization, next to Toyota and Japan's largest bank (Mitsubishi). Larger than Sony, larger than Nintendo, larger than Honda…

They also make great digital microscopes.

Re: Mortgages are a manufactured product (2022)

#58

Post by skybrian »

Recently, financial regulators have become concerned that nonbank mortgage originators and servicers would do poorly in a financial crisis. [1] They aren’t on the hook for the risk of nonpayment, but they are for other risks, it seems? Apparently they are worried about supply chain disruption resulting in fewer mortgages.

The risks section of Rocket Mortgage’s annual report has some possibly useful descriptions, but I don’t have the background to put them into context.

[1] https://www.cnn.com/2024/05/13/economy/mortgage-company-risk...

Re: Mortgages are a manufactured product (2022)

#59

Post by maxerickson »

jjmarr wrote: post #15
mvkel wrote: post #3

> If you replaced your current mental model for mortgages with “it’s like a paper electronic flow meter for money, possibly with less paper these days”, it would improve your ability to understand the mortgage industry. I feel even more confused

The thesis is that mortgages are not primarily a service a bank provides to a homeowner. They are a financial product that banks sell to institutional investors (as an example) that want a guaranteed cashflow decades into the future. Of course, a multibillion dollar pension fund does not want to directly write John Doe a mortgage and deal with him. Their business is giving money to pensioners, not selling mortgages.…

They are a financial product that banks sell to institutional investors

*Originators.

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