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Thejerry01

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25/08/24

15:53

Post #: 75363076
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Originally posted by ClarkKent: ↑

"Another friend told me that the Oz banks are now selling their housing debts to foreign companies and removing the obligations off their books. Imagine that these companies start to call in loans."

Nothing could be better from the truth my esteemed friend @Ewebute of the internet.

What does happen is that Residential Home Mortgages are securitised and sold to investors.

100% routine.

In America banks sell ALL (most) of their mortgages to Fannie Mae and Freddie Mac (both government agencies) who securitise these mortgages into Residential Mortgage Bank Securities (RBMS) which are in turn sold to investors. Its been happening since (because of) the Great Depression. For the banks, it is a source of funding which enables them to originate more affordable 30-year loans which is a big thing in the USA.

In Australia there is no Fannie Mae / Freddie Mac (although ScoMo briefly entertained the idea of creating one) and the banks do the securitisation themselves (through Special Purpose Vehicles). Nothing sinister and there is no hiding of liabilities. You dont need more than a cursory understanding of Financial Accounting to establish this for yourself by reading CBA's (for example) financial statements

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Buffet dumping banks

XJO Value at posting: 8,023.9
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