The Viability Of A Private Central Facility For Mortgage-Related Securities

Abstract

The concept of a mortgage exchange has emerged as a topic of current discussion and debate. This study presents the results of a national survey of fund managers and advisors which attempted to determine the feasibility of a privately sponsored central facility for the creation and marketing of mortgage-related securities. The study discusses the methodologies of the research and presents the conclusions, The survey results suggest that such a central facility would be viable if the sponsors possessed experience in real estate lending, have a willingness to maintain direct contact with funds, are able to reduce commissions on transactions, provide the role of master servicer on the underlying mortgages, and structure the securities according to certain specifications such as ratings in terms of risk class, call protection, insurance, liquidity in a secondary market, geographic diversification, and inflation indexation.