What are Mortgage-Backed Securities? (2008 Financial Crisis Explained)

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What are Mortgage-Backed Securities? (2008 Financial Crisis Explained)

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4 жыл бұрын

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If you've lived through the 2008 and 2009 financial crisis or if you've been paying attention to the news recently, you likely have heard the term "mortgage-backed security." You likely know that it is loosely related to mortgages, but also, isn't directly a mortgage.
The rest, tends to get a little bit complicated in financial jargon. Mortgage-backed securities, or MBS, and the market that surrounds them are a major underpinning to the US economy, so it's important to understand them if you want to understand greater economic actions. Let's explain this market simply, in common terms so everyone can understand.
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Пікірлер: 279

@Greggsberdard Жыл бұрын

Amazing explanation !! I'm wondering if those who experienced the 2008 financial crisis had a smoother time compared to me at the moment. The stock market is causing me significant concern as my income isn't as high as it used to be. This worry stems from the fear that I might not have enough savings for my retirement since I'm unable to contribute more to my savings.

@VictorBiggerstaff Жыл бұрын

I'll suggest you create a diversification strategy because building a good financial-portfolio has been more complex since covid. Recently my colleague advised me to hire an advisor, surprisingly I have accrued over $120K under the guidance of my coach during this crash. She figured out Defensive strategies to protect my portfolio and make profit from this roller coaster market.

@crystalcassandra5597 Жыл бұрын

@@VictorBiggerstaff Mind if I ask you to recommend this particular coach you using their service?

@VictorBiggerstaff Жыл бұрын

Credits goes to " Vivian Barbara Mui " one of the finest portfolio managers in the field. She's widely recognized; you should take a look at her work.

@AshleySpeaks4U 11 ай бұрын

Everybody is there too. 😖

@ryandale2365 4 жыл бұрын

Hands down the best and most simplified explanation of this content I've seen. Brilliant job.

@ConcerningReality 4 жыл бұрын

Thank you!

@jullietgolf5289 2 жыл бұрын

Best 10 min I spent all month

@jullietgolf5289 2 жыл бұрын

20 min. When I wrote the comment I was half way 🤭

@ClementRusso2 9 ай бұрын

Basically , mortgage rates have reached their highest point since 1998, spanning 25 years. Considering inflation trends, there's potential for them to rise even further. Just a year ago, a 28year fixed rate was only 6%. This prompts the question: should I wait for a housing market downturn before buying or shift my focus towards the equity market?

@antonnohr 9 ай бұрын

The stock market follows a similar pattern, in order to sustain profits, it's crucial to possess a deep understanding of the market.

@Jason9o669 9 ай бұрын

@@antonnohr Indeed, I primarily engage in buy-and-hold, but my portfolio has been in the negative for an extended period. To achieve substantial gains, consistency and regular portfolio adjustments are essential.

@AlexanderDanielley 9 ай бұрын

I think investing was simpler in the 70s, but it's more complex now. Those consistently profiting today are usually professionals. That's why I've had an advisor for 7 years to steadily grow my retirement portfolio.

@AlexanderDanielley 9 ай бұрын

My CFA, Stacey Lee Decker, is highly esteemed for her proficiency and deep expertise in the financial market. She possesses an in-depth knowledge of portfolio diversification and is considered an authority in this field.

@VickyAlvy 9 ай бұрын

Fascinating. I'm currently on her webpage, conducting my research. She appears to be quite skilled. I've sent her an email and scheduled a phone call.

@CowboyBurgerofTheWest 4 жыл бұрын

I came here in order to understand the movie THE BIG SHORT

@disgusted2072 3 жыл бұрын

Watch the movie Margin Call if you haven’t already.

@kausheyabasu5802 3 жыл бұрын

Same

@nkana21 3 жыл бұрын

Me too 😫

@maksimschneider9004 2 жыл бұрын

Same bro And I just started work in on of the lenders bank because of that lmao drip swag

@commercefied 2 жыл бұрын

Same

@ezracappi8996 4 жыл бұрын

well done dude,now i can understand it,i was confused when i watch the big short for the first time due to its complex terms.

@ConcerningReality 4 жыл бұрын

Thanks! Me too, I try to make videos about things I want to learn better, in hopes that it benefits other people too!

@jugalpokar 3 жыл бұрын

Same thanks for making this video

@AverageEnjoyer888 4 жыл бұрын

This video is like a compulsory trailer for The Big Short, and I really glad that I've watched this before seeing the movie

@KFCJones 4 жыл бұрын

As concise as possible, given the complexity... Clearly explained. Great video!

@ConcerningReality 4 жыл бұрын

Thank you! It’s crazy that it takes 20 minutes to break down one of the simpler forms of financial securities 🤣

@TheZorboidOrbb Жыл бұрын

Great job with the video, breaking it down and giving right examples. I had about 20% understanding of what happened but now I think I am at 75%. Thanks!

@noymorgenshtein9191 3 жыл бұрын

I've watched a few videos about this subject, and yes I understood the basics and the background, but man your explanation was as simple and sharp as it gets. Very well done! I had no way of leaving this video without subscribing.

@ConcerningReality 3 жыл бұрын

Thank you!

@TheSuperZufan Жыл бұрын

Best explanation on the 2008 crash and the different components that lead to and impacted the crash. I needed to explain this to someone and was looking for a simplified way to explain all of it. Now, I can just share this video with them.

@fernandofernandez8067 2 жыл бұрын

Having watched several videos about MBS, I think this video is one of the best. The detailed explanation about MBS, CDO Collateralized Debt Obligations and Credit Default SWAPS is great!

@ConcerningReality 2 жыл бұрын

Thank you!

@shmuel961 4 жыл бұрын

If I understand the 2008 crisis correctly, the same banks who made the bad loans (and got them rated triple A) also bought CDS on those mortgages. It was a double swindle. Not only did they knowingly make and sell terrible loans and lie about it, they also bet against their own product (the MBS) by buying CDS.

@ConcerningReality 4 жыл бұрын

Correct! Pretty crazy.

@cstinson70 4 жыл бұрын

Actually you don't know it correctly if you think big banks make bad loans all on their own.

@johnyossarian9059 11 ай бұрын

Not exactly. The big investment banks buy those bad loans (subprime mortgages) from the mortgage lenders, package them into MBS, and sell them to investors (mostly institutional investors). Then they take out CDS against those MBS.

@1996sarvesh Жыл бұрын

I never comment on videos, but I've watched about 100 videos on this understanding nothing, while you sir just made me understand the whole movie in 20 minutes! KUDOS!

@ConcerningReality Жыл бұрын

Thank you! So glad it was helpful.

@laurelharper123 9 ай бұрын

Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.

@TheresaAnderson-kf5xw 9 ай бұрын

If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.

@maryHenokNft 9 ай бұрын

Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.

@maggysterling33254 9 ай бұрын

@@maryHenokNft Please tell me how can I connect to your advisor. My funds are being murdered by inflation, therefore I'm looking for a more profitable investing strategy to put them to work.

@maryHenokNft 9 ай бұрын

I’m guided by *Mary Onita Wier* An experienced coach with extensive financial market knowledge. While you can consider other options, her strategy has yielded positive results for me. She offers valuable insights, including entry and exit points for the securities I concentrate on.

@BiancaSherly-qt6sb 9 ай бұрын

I appreciate the information. I did my own research, and your advisor seems to possess a great deal of expertise and knowledge. I've reached out to her via email and scheduled a phone call. I'm impressed by her expertise, and I'm looking forward to our discussion.

@bengeorge894 4 ай бұрын

I was completely blown away when I watched The Big Short. it seems almost surreal that such financial instruments even exist. you are not investing in something physical, you are literally investing in the confidence of people paying, you make money when others simply honour their commitments. Human Imagination is scary.

@donn7161 4 жыл бұрын

Amazing, clear and concise explanation! Many people are blaming MBS's and CDS's for the 2008 financial crisis, but do you think the crisis could have been avoided if the rating agencies rated the MBS's correctly such that the CDS's for senior tranches would be priced higher to reflect the increased risk?

@sonnyjohnson8887 2 жыл бұрын

He addressed the conflict of interest between the credit rating agencies & and those that sold such said security

@shashikiranneelakantaiah6237 3 жыл бұрын

Seriously even I'm here after watching the movie Big Short, as I'm not from US, I couldn't understand most of the financial terms used in the movie, but now I know what MSB is all about, thanks to you.

@omaimabentaleb2001 3 жыл бұрын

This video is so underrated in term of views. Well done, you just make it easy to understand.

@ConcerningReality 3 жыл бұрын

Thank you!

@manojrenikunta2301 2 жыл бұрын

I dont know how to praise you for such an incredible video. Explanation at its best you deserve an award in this category.. great job 👏👏👏👏

@FunFacts-gx8gq 4 жыл бұрын

Actually some really interesting stuff! Thanks for putting this together!

@ConcerningReality 4 жыл бұрын

Thanks! Took a crazy long time to compile this information, so it's much appreciated.

@mirdesai4875 4 жыл бұрын

Your way of explaining is simply indescribable ....amazing work brother! Respect!❤️

@jamesbaz4403 3 жыл бұрын

One of the best quality videos on youtube.

@ConcerningReality 3 жыл бұрын

Thank you! This one took forever to make.

@chaging1 Жыл бұрын

This video was well- explained and well-thought. I have learned a lot in a short video, plus your sequence of your explanations were clear and made perfect sense throughout. I salute you for a video well done!!!

@bobbyomari5500 Жыл бұрын

This stuff is so confusing to understand, so I wish I saw this video first! Now I gotta watch the big short again to REALLY understand it.

@cellmaker1 2 ай бұрын

Great explanation! It would be great if you could talk about some of the other issues around mortgagees, around MBSs, CDOs and CDS's. a) Who ends up keeping track of (servicing) mortgages and making sure the right people are getting paid? This sounds trivial but it seems like it could become increasingly complex and expensive. When the mortgages are securitized and chopped up, etc., how can they keep all this straight? And who keeps all this straight? b) In the Big Short, they kept saying "and then the entire [bond/CDO] goes to zero." What does this mean if there are still mortgages that are not in default (which was how you showed it in this video)? c) Not explained here, but in the Big Short they talked about "synthetic CDOs" as side bets on CDOs, etc. Whose money funded those side bets? How did this affect financial markets, perhaps globally? d) Not explained here, what about the insurers who (I guess) were selling the CDSs (or buying the other side of CDSs sold by the banks)? And reinsurers. How did this work in reality? (Personal note: I lost a ton of money because I was holding the bluest or bluechip stocks at the time - AIG.)

@jovial1234567 3 жыл бұрын

Excellent. Thanks for simple descriptive explanation, bcos this topics not easy to explain. Yet well done by you and your team.

@AbigailT9 Жыл бұрын

Utterly enjoy this video. Simple and easy to understand.

@abhishekshukla4606 Жыл бұрын

bro such a simple and effective explanation.Nice work

@alexanderwinter9171 4 жыл бұрын

Amazing quality you're on the road to a million subs

@ConcerningReality 4 жыл бұрын

Thank you!

@radityadjatnika424 2 жыл бұрын

Best explanation for technical terms in the big short movie.

@arunkenta 4 жыл бұрын

This was a really well out together video. I'm watching this after watching the big short and now I understand the movie so much better

@ConcerningReality 4 жыл бұрын

Thank you!

@AK-ce2sh 4 жыл бұрын

Chutiya ab dekh Raha hai

@tgbyhn841997 2 жыл бұрын

Just one word for the efforts you've put into making this video. WOW !

@ryanyao5 4 жыл бұрын

Not all heroes wear capes. Awsome video!

@npz1838 Жыл бұрын

Great explanation. However, you left out the fact that it wasn't just the banks that loosened their guidelines to make more money; the government forced them to loosen guidelines to allow lower income ppl obtain loans. This produced a massive amount of risky mortgages. There was blame all around.

@Raymondjohn2 Жыл бұрын

I paid up all my mortgages in 2yrs while working with a Financial Adviser. I’m 50 and my husband 54 we are both retired with over $3 million in net worth and no debts. We got to realize that the secret to financial freedom is making better investments.

@hermanramos7092 Жыл бұрын

That is so amazing, I’m trying to get onto the investing ladder at 40. I wish at 55 I will be testifying to similar success..

@martingiavarini Жыл бұрын

How can I reach this adviser of yours? because I'm seeking for a more effective investment approach on my savings

@bob.weaver72 Жыл бұрын

@@martingiavarini Catherine Morrison Evans is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..

@martingiavarini Жыл бұрын

@@bob.weaver72 Benevolence, this reference seems valid.. Just inputted her full name on my browser and found her site without sweat, 20 years of experience is certainly striking! very much appreciate it

@sebastiansantiagodiazrodri424 3 жыл бұрын

Very good explanation, man. Congrats for the video!

@checksandbalances6714 Жыл бұрын

Wow that was great - just saw 2 other videos that didn’t really explain properly but this explained a lot -thank you !

@shenay9377 4 жыл бұрын

This was a great coverage. Well done! Thank you.

@user-yn2bo1hu1g 4 ай бұрын

wonderful explanation! I finally get the core of 2008 GFC . Thx!

@ahmadkarim2994 4 жыл бұрын

Ur just amazing you helped me alot with my homework and with understanding the big short ...keep ''learning things'' as u love to do and keep informing the new students with you amazing summaries ..Regards from middle east

@aaronkohlhoff Жыл бұрын

Currently studying CFA Thanks for explaining it

@vic98 Жыл бұрын

Thank you for making this complicated thing simple and easy to understand great job

@sophiaj794 4 жыл бұрын

This was so helpful thank you! All makes sense now!

@emiliospowerballer1441 2 жыл бұрын

So, institutions and organizations bought securities which were backed on the assumption that housing prices would have kept increasing while homeowners would be able to pay for their homes. So they basically played a bet on people buying homes for profits. If that isn't ethical business conduct, I don't know what is. This is a great video, and more people need to understand what happened in 2008 because they would understand just how greedy businesses can become for profits and revenue.

@kennyguevara6277 2 жыл бұрын

It's crazy. I'm learning all about this to buy my first investment property but the more I look into things the more I realize we are trending into another crash.

@Shemdoupe 3 жыл бұрын

This is an incredible video. Nice job. Super informative and easy to follow.

@oliobgmoti-bulgaria8401 Ай бұрын

This explanation was brilliant

@uncoolhodler Жыл бұрын

Amazing explanation! Well done sir.

@cedricleclercq7733 4 жыл бұрын

Amazing! Thanks for the simple explanations. Keep doing it!

@ConcerningReality 4 жыл бұрын

Thanks, will do!

@anahernandez-dm4gh 3 жыл бұрын

Thank you for all the examples and explanations!

@x-perimentalthoughts 3 жыл бұрын

Thank you for making this video. Now I understand the bigger picture of MBS. Again thank you 💯💯💯

@anonymous1432341 2 жыл бұрын

I am not based in US but I remember the 2008 crisis. That was the year I married. I never understood how it happened. This really made it easy to understand. Thanks

@mortyjr5890 Жыл бұрын

help me understand this.. if borrower were not actually able to pay back their loan, then mbs investor had to suffer,, but they had the security in their hand,, couldn't they just sell the mortgage?

@siddhantbajpai5889 3 жыл бұрын

You are awesome dude! Wonderful explaination!!

@gabicristache 2 жыл бұрын

Amazingn content! This is the only video that helped me understand how MBS worked.

@user-sc2xg6sf1k 2 жыл бұрын

Finally I understood MBS, think you

@mathewharrison5659 2 жыл бұрын

This video was stellar! Thank you

@mehtaabvirpabla7174 3 жыл бұрын

Amazing Video! Super easy to understand and the visuals helped a lot! This summed everything up!

@ConcerningReality 3 жыл бұрын

Thank you!

@xinyi6139 11 ай бұрын

Thank you so much for explaining it! You have made it so much easier to understand 🙏

@GRACIAMAKEOVERS 2 жыл бұрын

THIS WAS BRILLIANT. YOU'RE AMAZING

@ConcerningReality 2 жыл бұрын

THANK YOU!

@themikapnias2771 3 ай бұрын

terrific video

@ankitdhn004 3 жыл бұрын

Thanks Bade Bhai for clearing the very basic of MBS and CDO. Its time for me to re-watch Big Short, Margin Call, Inside Job. Thanks Again. Keep Going.

@Masterhitman935 4 жыл бұрын

A well done video and explanation, I’ll never invest in MBS in principle of risks and loan should alway being in the banks, never in a shell company.

@bobbysands5385 10 ай бұрын

Thank you! Great job explaining.

@user-tk7sc4gz2v 2 жыл бұрын

Amazingly explained!

@Sheblah1 Жыл бұрын

Excellent explanation, thanks for making this episode

@Xelferd 4 жыл бұрын

Thank you so much!! Very helpful especially the oversimplified calculations:)

@ConcerningReality 4 жыл бұрын

Glad you enjoyed it!

@willyh.r.1216 3 жыл бұрын

Very helpful and well prepared. Thank you so much.

@ConcerningReality 3 жыл бұрын

Glad it was helpful!

@mayamaheshwari9440 4 жыл бұрын

Very well explained. This video should get much more views.

@ninjamaplesyrup 2 жыл бұрын

Beautifully explained! Thank you!

@LydiaLai-jp7qs Жыл бұрын

it is a super clear explanation! Thank you so much!

@Iseenoobpeoples 3 жыл бұрын

Great video

@JD-hf6wb 2 жыл бұрын

This video deserves to be standard course in schools

@saibrungi 3 жыл бұрын

Thank you so much. Explained the concept in the finest way.....thank you.

@anjanaashokkumar1994 3 жыл бұрын

You are amazing. I understood everything pretty clearly. Thanks a lot 🙏

@jperson03 Жыл бұрын

This was a good video....everything is starting to click now

@TheRamsclaiton 3 жыл бұрын

thank you so much for the video .. you explained it so much better .. others just confused me

@FranzKamikaze 3 жыл бұрын

Great video. Very well explained. Thanks!

@lacindizzle Жыл бұрын

Very helpful video! Thanks!

@sylaroneill3100 3 жыл бұрын

Nicely explained!

@MiVida73 2 жыл бұрын

Phenomenally explained. Many 🙏 thanks

@Internetspider 21 күн бұрын

Best explanation ✅

@SeparateMentality 6 ай бұрын

Phenomenal video!

@wcottee 2 ай бұрын

Loved this video...watched this after "The Big Short" and it made everything clearer. Just one nitpick. At around 19:30 we say that a 500% increase of $100 is $500. Correct me if I am wrong but I believe it should be $600 ( using % change = (new - old) / old *100 with old = 100 and % change = 500). Am I missing something?

@quantumunderdog7932 Жыл бұрын

One of the best explanation videos I've watched in a while! Keep up the Great Work!

@Reem.H.A 3 жыл бұрын

this was great! thank u

@aws7142 3 жыл бұрын

Nicely done!

@michaelchilders4492 2 жыл бұрын

Excellent video!

@ConcerningReality 2 жыл бұрын

Thank you!

@Nxrth2001 2 жыл бұрын

Fantastic video!

@thiagohobi 2 жыл бұрын

Great video! Well done!

@shivaadhikari7719 Жыл бұрын

People need to watch this video before watching movie Big Short

@jazzm786 4 ай бұрын

That’s exactly what I’m doing lol

@sajsultan1839 3 ай бұрын

@@jazzm786 what have you learnt from this ?

@AndyElliottrealtor 2 жыл бұрын

Excellent! Thank you.

@snowball9913 4 жыл бұрын

Excellent quality video

@MrAvatar180 4 жыл бұрын

This was great...wouldn't it be helpful to think of MBSs as bonds rather than equity? The equity framing makes it a little confusing

@ByzantineCapitalManagement Жыл бұрын

Tey were bonds only but sold as equities. Even conventional Govt Bonds are sold like equities.

@arielaw4 2 жыл бұрын

Brilliant explanation

@allamasadi7970 4 жыл бұрын

You should do more finance videos, this KZfaq niche is finally blowing up 👍

@ConcerningReality 4 жыл бұрын

Thanks! I’m trying, all my finance videos have been doing great lately.

@Eugene_Liu304 3 жыл бұрын

WELL EXPLAINED, TY

@christianjon8064 2 жыл бұрын

So the whole 2008 mortgage crisis basically came from people selling insurance they had no ability or intention of paying out. It wasn’t actually anything to do with the housing market or even the MBS market.

@kevino4372 18 күн бұрын

They should have ceased the payouts on the credit default swaps when they started pouring in. Would that have halted the crash a bit?

@HarunMwenda Жыл бұрын

Men... you explain the movie big shorts too well..💪👌👍

@reema8779 4 ай бұрын

Can you explain how the SPV or the second bank gets profit if they sold them as bonds instead of shares ?

@Tattvashe 3 жыл бұрын

Amazingly explained....

@ConcerningReality 3 жыл бұрын

Thank you!

@Tattvashe 3 жыл бұрын

@@ConcerningReality I'm Trainer too, and I was surprised to see most of the story i created for my presentation at work is the same.. Infact the way how you connected the entire story is amazing... Appreciate it... Looking forward to more such financial jargons used, explained beautifully with stories... Kudos!