4 ms·

Are they sold Pennies on the dollar? Can I buy my own mortgage or is it bundled

namelessoracle 4y ago
Given how modern banking works, its probably not only bundled but was chopped into 12 different pieces that was put in 13 different bundles :P
- susiecambria 4y ago
  And in the business, the pieces are referred to as tranches. For those who need a primer, check out https://www.compareclosing.com/blog/all-about-mortgage-tranches/ https://www.compareclosing.com/blog/all-about-mortgage-tranc...
- jimbob45 4y ago
  Is there a place for people like me that have lost complete faith in the public markets and banking systems? I've independently come to the conclusion that the NYSE/NSDQ are scams and want to stick with stuff like government bonds. I'm surely not the only one to think this way, right?
  - rightbyte 4y ago
    There are alot of scammy stuff going on in public companies but what is the scam on the exchanges themself? I mean surely most companies on the exchange are not scams either?
    - jimbob45 4y ago
      https://www.protocol.com/fintech/payment-for-order-flow-explained https://www.protocol.com/fintech/payment-for-order-flow-expl... https://www.npr.org/2014/04/01/297686724/on-a-rigged-wall-street-milliseconds-make-all-the-difference https://www.npr.org/2014/04/01/297686724/on-a-rigged-wall-st... PFOF and HFT mean that no matter how much you win, the exchanges and HFTs will always win more.
      - richiebful1 4y ago
        Payment for order flow is what underpins commission-free trading. Say what you will, but as a long-term investor, I'm always trying to minimize fees and commissions. It's extremely hard to win as a small-money day trader, so I won't play that game.
      - MrMan 4y ago
        This gives you lower fill prices stop worrying about things extraneous to your investing bracket. You should worry about allocating long term to sensible pieces of the pie chart and minimize churn.
      - quickthrowman 4y ago
        HFT has reduced spreads of some equities to a penny, all market participants benefit from increased liquidity. Also, Citadel is buying retail order flow because they’re reasonably certain they can capture the spread and not get run over by an institutional trader with more information than the market maker. They aren’t frontrunning your 20 share order because you aren’t going to move the market by purchasing 20 shares. Zero commissions and tight bid/ask spreads are better for an individual than no PFOF and $5/trade transaction fees with 25-50 bps bid/ask spreads.
      - positr0n 4y ago
        Both PFOF and HFT are good for the little guy and neutral to negative for the big traders. https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone... https://www.chrisstucchio.com/blog/2012/hft_apology.html https://www.chrisstucchio.com/blog/2012/hft_apology.html
  - bdcravens 4y ago
    Just buy everything outright, no financing.
  - joebob42 4y ago
    What do you mean "a place"? No one is making you buy nasdaq, just stick with government bonds.
  - Ekaros 4y ago
    And what if you don't even trust the government bonds... The debt/gdp ratio doesn't look that good either...
bombcar 4y ago
If they're secured loans they don't sell for pennies on the dollar. Even the worst of the liar loans didn't sell that low (the whole problem is nobody knew how to price them, but they were sure they were worth something).
patrickthebold 4y ago
I doubt they'd be sold for pennies on the dollar. Assuming you have a fixed rate mortgage, it's worth less now because interest rates went up. If you ignore all the transaction/processing fees. You could borrow some number less than your principal balance at today's rates ~5%, and use that to buy your current mortgage at a discount (it dropped in value). But your monthly payment would end up the same. Higher interest on a lower principal balance. Roughly.
aidenn0 4y ago
TFA says $0.85 on the dollar.
- s1artibartfast 4y ago
  Which could be the real value if you include the time value of money and inflation. A 100k loan today that pays back 105% a year from now isn't worth 100k.
  - rightbyte 4y ago
    You might be fine with 5% of that if the best you can get though. Mortage rates do not have to match inflation.
    - s1artibartfast 4y ago
      My point was that if the interest rate is worse than inflation, most people are better off NOT paying off their mortgage and waiting.
ars 4y ago
> Are they sold Pennies on the dollar? Only bad debt is sold for such a discount. A normal mortgage with nothing wrong with it will be sold at full value, i.e. sold to someone who wants to make money on the interest.

Given how modern banking works, its probably not only bundled but was chopped into 12 different pieces that was put in 13 different bundles :P

susiecambria 4y ago
And in the business, the pieces are referred to as tranches. For those who need a primer, check out https://www.compareclosing.com/blog/all-about-mortgage-tranches/ https://www.compareclosing.com/blog/all-about-mortgage-tranc...
jimbob45 4y ago
Is there a place for people like me that have lost complete faith in the public markets and banking systems? I've independently come to the conclusion that the NYSE/NSDQ are scams and want to stick with stuff like government bonds. I'm surely not the only one to think this way, right?
- rightbyte 4y ago
  There are alot of scammy stuff going on in public companies but what is the scam on the exchanges themself? I mean surely most companies on the exchange are not scams either?
  - jimbob45 4y ago
    https://www.protocol.com/fintech/payment-for-order-flow-explained https://www.protocol.com/fintech/payment-for-order-flow-expl... https://www.npr.org/2014/04/01/297686724/on-a-rigged-wall-street-milliseconds-make-all-the-difference https://www.npr.org/2014/04/01/297686724/on-a-rigged-wall-st... PFOF and HFT mean that no matter how much you win, the exchanges and HFTs will always win more.
    - richiebful1 4y ago
      Payment for order flow is what underpins commission-free trading. Say what you will, but as a long-term investor, I'm always trying to minimize fees and commissions. It's extremely hard to win as a small-money day trader, so I won't play that game.
    - MrMan 4y ago
      This gives you lower fill prices stop worrying about things extraneous to your investing bracket. You should worry about allocating long term to sensible pieces of the pie chart and minimize churn.
    - quickthrowman 4y ago
      HFT has reduced spreads of some equities to a penny, all market participants benefit from increased liquidity. Also, Citadel is buying retail order flow because they’re reasonably certain they can capture the spread and not get run over by an institutional trader with more information than the market maker. They aren’t frontrunning your 20 share order because you aren’t going to move the market by purchasing 20 shares. Zero commissions and tight bid/ask spreads are better for an individual than no PFOF and $5/trade transaction fees with 25-50 bps bid/ask spreads.
    - positr0n 4y ago
      Both PFOF and HFT are good for the little guy and neutral to negative for the big traders. https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone... https://www.chrisstucchio.com/blog/2012/hft_apology.html https://www.chrisstucchio.com/blog/2012/hft_apology.html
- bdcravens 4y ago
  Just buy everything outright, no financing.
- joebob42 4y ago
  What do you mean "a place"? No one is making you buy nasdaq, just stick with government bonds.
- Ekaros 4y ago
  And what if you don't even trust the government bonds... The debt/gdp ratio doesn't look that good either...

bombcar 4y ago

If they're secured loans they don't sell for pennies on the dollar. Even the worst of the liar loans didn't sell that low (the whole problem is nobody knew how to price them, but they were sure they were worth something).

patrickthebold 4y ago

I doubt they'd be sold for pennies on the dollar. Assuming you have a fixed rate mortgage, it's worth less now because interest rates went up. If you ignore all the transaction/processing fees. You could borrow some number less than your principal balance at today's rates ~5%, and use that to buy your current mortgage at a discount (it dropped in value). But your monthly payment would end up the same. Higher interest on a lower principal balance. Roughly.

aidenn0 4y ago

TFA says $0.85 on the dollar.

s1artibartfast 4y ago
Which could be the real value if you include the time value of money and inflation. A 100k loan today that pays back 105% a year from now isn't worth 100k.
- rightbyte 4y ago
  You might be fine with 5% of that if the best you can get though. Mortage rates do not have to match inflation.
  - s1artibartfast 4y ago
    My point was that if the interest rate is worse than inflation, most people are better off NOT paying off their mortgage and waiting.

ars 4y ago

> Are they sold Pennies on the dollar? Only bad debt is sold for such a discount. A normal mortgage with nothing wrong with it will be sold at full value, i.e. sold to someone who wants to make money on the interest.