We all have heard of it.

The mortgage...

Or they might even start to buy things that aren't Treasuries.

But for the simplicity of this argument,

Six percent home loans represent the industry average now.

A mortgage rate of six percent is becoming the current industry average.

And for the sake of simplicity, I'm going to assume that the loans in this presentation are interest only loans.

Why were they willing to pay rent, when they could have bought a house, where the mortgage would have been interest plus a little principal it would have been no more than 400 a month?

Most of the loans we're familiar with in our personal

Let's say it's um let's say its 10 billion of commercial mortgages.

And then of course at a party, when I start to explain this, it's like, ah ha.

This is highly rated mortgage backed securities, maybe they have a slightly higher interest rate.

So let's think about how we manage our money.

So right here are a whole bunch of people's mortgages.

And what are they?

why.

And that caused housing prices to go up.

And what tax deductible means, is that this amount of money that I spend on interest on my mortgage,

Well I have the original mortgage on my house.

Imran's no dummy, so he does the same thing. He raises his price to 2.

I suffered from my mortgage loan.

So it's not just a promise to get money.

You know, we take out these loans to buy houses.

I'm thinking about people's jobs, about their mortgages and pensions and their college funds for their kids.

Or what you think the real interest will be after you take into account people pre paying their mortgage, people defaulting on their mortgage, and other things

You'll sell the house and you'll pay it off, even though you can't pay the mortgage anymore.

This is really the tip of the iceberg.

It's only worth 100,000 now.

Let's say I'm some type of the Investment Bank.

Well everyone knows that it's not going to be exactly 10 .

You can also take an interest only loan, but the component of the interest is the same.

You might use an aggregator. An aggregator is somebody who takes a vertical market approach.

You're assuming interest only loans.

So, each of these is an investor.

The mortgage payment, we calculated that before, using our mathematical knowledge of geometric series.

Maybe you're sixty five years old.

Interest on loans is high at present.

What does it mean, derivative?

Now what are my liabilities?

Right?

Remaining mortgage on the home, 1 07,000.

Your address in Brooklyn, the payments on your mortgage, how long you've been a member of the NYPD.

The loan carries 5.5 interest.

I am right now thirty four years old and

And when they default, what is kind of the recovery?