Fannie Mae and Freddie Mac’s
regulator may identify as much as $30 billion of debt included
in mortgage bonds that the companies can force sellers to
repurchase, according to Joshua Rosner, an analyst who in 2007
predicted the collapse in the market for the securities.
Contents contributed and discussions participated by Kripansh Sharma
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Fannie Subpoenas to Show $30B Bad Mortgages, Rosner Says - Bloomberg - 0 views
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Backdoor Bailout - Furor Over Bofa's $2.8b Mortgage Settlement | LoanWorkout.org - 0 views
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Sub prime mortgages are mortgages handed out to people with a terrible credit histories (usually below 600). also have a higher interest rate due to higher risks for lenders.
There are several different kinds of subprime mortgage structures available. The most common is the adjustable rate mortgage (ARM), which initially charges a fixed interest rate, and then convert to a floating rate based on an index such as LIBOR, plus a margin.
(http://www.investopedia.com/ask/answers/07/subprime-mortgage.asp)
What is Collateralized Debt Obligations (CDO)?
CDO is a financial instrument widely used to transform home mortgages into tradeable securities. CDO repackages individual loans into a product that can be sold in the secondary market. These packages consist of auto loans, credit card debt, or corporate debt. They are called collateralized because they have some type of collateral behind them.
(http://useconomy.about.com/od/glossary/g/CDOs.htm)
Countrywide Financial was a mortgage company. if was bought by Bank of America in 2008, due to massive debt under their belt that they couldn't pay back.
Merrill Lynch?
Merrill Lynch is a financial institution that was bought by Bank of America in 2008. Now along with Bank of America it is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services.
(http://www.ml.com/index.asp?id=7695_8134)