Subprime crisis

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Subprime Crisis : 

Subprime Crisis

Housing finance in USA : 

Housing Finance in US depend on Capital market,ie.Bond Market (Thai depend on Bank Deposit Market) Housing Loans in US Fixed rate mortgage Adjustable rate mortgage (ARM) Mortgage outstanding : 50 % of GNP (Thailand 10 %) Housing finance in USA

Prime : 

Prime Prime Mortgage Borrow <80 % of House price Good record from credit bureau Monthly payment < 25 % income Good Credit Scoring

Subprime : 

Subprime Subprime Mortgage Tarnished credit records Low Credit scoring Pay Higher Mortgage Rates

Subprime Boom : 

Subprime Boom Low Interest rate, after September 11 crisis Mortgage company increase subprime lending, low teaser interest rates Investment Banks engineer higher yield, high credit rating bond from subprime-how? Housing Boom in US

Financial Engineeringto support subprime : 

Financial Engineeringto support subprime

Subprime securitizationCollateralized Mortgage Obligation : 

Subprime securitizationCollateralized Mortgage Obligation Subprime Mortgage Senior-saleable Subordinate-hold CD0s CMO

CDOs Securitization (Collateralized Debt Obligations) : 

CDOs Securitization (Collateralized Debt Obligations) CDOs MBS CMO ABS High yield bond

CDOs Credit Ratings : 

CDOs Credit Ratings CDOs Senior : AAA Mezzanine AA to BB Equity : unrate

Subprime Crisis : 

Subprime Crisis Oil Price increase Inflation treat Fed increase interest House price start to fall

Subprime Crisis : 

Subprime Crisis Subprime NPL much higher than forcast !! Subprime Lender Mortgage Cos fail US Mortgage lending crisis CDOs Quality and Ratings fall Worldwide investors suffer losses CDO market in turmoil

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