4 ms·
They already won: their mortgage requires a big haircut to sell off because their rate is so far below market.
by __derek__ 4y ago
They already won: their mortgage requires a big haircut to sell off because their rate is so far below market.
- dylan604 4y agoThe person holding the debt of that mortgage does not win. The new bank coming in and buying the mortgage assets of the defaulting bank wins. The person holding the mortgage probably never even knows the difference.
- __derek__ 4y agoIt was a joke. Who owns the mortgage is irrelevant to the borrower, but the borrower gets to keep the below-market rate while the originator has to take a haircut on the deal. That's the sense in which they won.
- CoastalCoder 4y agoI don't think that's correct. IIUC, the lender who sells the debt takes a loss, but the amount of debt owed by the borrower remains the same.
- __derek__ 4y agoI was being cheeky. The people who took out these mortgages are paying a rate well below market-rate. They won in the sense that they're paying less to service the debt than the lender is paying to carry the mortgage.