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Further to what cperciva and jfager said, this bit stands out: At some point those homes will be taken over and sold for a loss. Every time that happens, the bo
by DougBTX 17y ago
Further to what cperciva and jfager said, this bit stands out: At some point those homes will be taken over and sold for a loss. Every time that happens, the bond shrinks. Eventually, our part of the bond will disappear entirely. Until then, we get a little money every month from people paying off their mortgages. We just got a check for $141.
It sounds like the guy knows he won't get any money if the underlying assets are sold, so their value doesn't really matter. He only gets paid when people pay their mortgages.
- viraptor 17y agoDoes it mean that it doesn't make any difference for those people if they pay their mortgages or not? The houses will be taken over anyways... does it really make a big difference at this point?
- JoachimSchipper 17y agoIt's actually beneficial to the investors if they keep paying their mortgages; they certainly won't foreclose an a home unless necessary. So yes, it matters. By the way, didn't you see the "paid off" portion of their portfolio? It's quite big.