Replies to post #426825 on Mr Cooper Group Inc (COOP)

[xoom]

Good DD....thank you....

[hotmeat]

Nice post...especially so because it lacks the tone of arrogance which has been symptomatic of this board the last couple days.

[investorhub123]

Thanks for the tutorial on these loans, nice post!

[Bizreader]

Good piece of research. eom

[stayshortstayhot]

Very nice post, thanks a lot.

[Donotunderstand]

The investors don’t own the trust or the mortgages, they would own the rights to the payments or income stream from the mortgages, this is why if a mortgage fails it has to be replaced and why they are called Mortgage Backed securities.


There are different arrangements

Normally the buyers of the paper (and if there are 5 transactions until they get to the final buyer - some tell me who is the buyer) has a mortgage specific pool. That means the MBS paper I buy - say at 1000 dollars (if not a principal only or interest only strip) give me the right to interest and principal on a set of numbered and identified by name mortgages

Thus when a mortgage is paid off (house sold or refinanced) - the principal flows as a lump to the buyer. In times of dropping rates the buyer might find they have 70-80% of the principal of 15-30 year regular mortgage back MBS paper returned to them in a few years

In return for assuming this form of reinvestment/interest rate risk (you do not know when you will get back your principal and how) - MBS paper (almost always rated AAA) pays a higher interest rate by say 3/8ths of a point on the 5 points then paper with a defined maturity date

[boarddork]

Exactly. Well said!