ST Alpha - "I was also trying to figure out how that worked too." (Reading a Post)

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In response to "The selling of new mortgages is an industry I don't understand." by David

I was also trying to figure out how that worked too.

Posted by Dano (aka dano) Jul 12 '16, 20:03

So a bank gives me a mortgage for X (principle).
At that time it's worth X + Y (total interest over time)

I assume they sell it for X + Y - Z (some discount over the total value)

The bank then gets amount less than the total amount that they would have gotten, but they get that money right now to use to make more money.

The new company still makes money (Z) over time.

Is that how it works?

Responses:

that's what I found when I researched my early sale to a gse (freddie or fannie) - they collect debt that's meant to be good (likely to be paid) and - i.b! Jul 12, 20:20
Sort of. - iSpam Jul 12, 20:20
I think that's about it. Pretty much the underlying concept of The Big Short - except in that case they - Meg Jul 12, 20:10
My WAG is that it's something much simpler. - David Jul 12, 20:08 6
- I think we need Nick Jonas in a bubble bath to explain it. -- nm - Dano Jul 12, 20:11 5
  - Wait! Is Nick the hot one? -- nm - David Jul 12, 20:12 4
    - Keep up. The Jonas Brother hierarchy goes: Nick > Joe > Joel Osteen > Kevin -- nm - Dano Jul 12, 20:15 3
      - Is Joel Osteen, like, honorary or what? -- nm - David Jul 12, 20:16 2
        
        He's just a jerk, but Kevin is worse. (Andy Cohen and Billy Bush are worse than Kevin though) -- nm - Dano Jul 12, 20:18 1
        
        Is AllJonasBrothersRanked.com down for maintenance or what? -- nm - David Jul 12, 20:19

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I was also trying to figure out how that worked too.

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