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,

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

Six percent home loans represent the industry average now.

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

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

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?

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

And what are they?

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

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

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

And that caused housing prices to go up.

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

Well I have the original mortgage on my house.

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

why.

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

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

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

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

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

I suffered from my mortgage loan.

It's only worth 100,000 now.

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

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.

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

You're assuming interest only loans.

So, each of these is an investor.

This is really the tip of the iceberg.

Interest on loans is high at present.

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

Well one example is, in this situation, if I did get a fixed rate mortgage and we learned, when you look at all those adjustable rate mortgages, we know that a lot of people didn't.

Maybe you're sixty five years old.

What does it mean, derivative?

Remaining mortgage on the home, 1 07,000.

The loan carries 5.5 interest.

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

I am right now thirty four years old and

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

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

So then even more money flowed in.