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To: smolejv@gmx.net who wrote (33642)	5/13/2003 7:42:46 PM
From: carranza2	Read Replies (1) \| Respond to of 74559

Depends on what you call nominal. No exposure, however, to the refinancer for the lost cash flow.

To: smolejv@gmx.net who wrote (33642)	5/13/2003 8:02:34 PM
From: Box-By-The-Riviera™	Respond to of 74559

it's called money shopping. basicially buying the latest deal to pay off the previous one, and lower the over all... in the case of homeowners.. they can take the surplus and "spend it"... in the case of corporations, they lower their debt obligations. nothing new. just shopping the prevailing market rates. so, when are we gonna hear your astute observations on the german landscape? as a painter, one might assume you are more than superficial in your ability to see?

To: smolejv@gmx.net who wrote (33642)	5/13/2003 8:54:57 PM
From: LLCF	Read Replies (1) \| Respond to of 74559

<If this is so, there must be an awsome amount of offsetting interest swaps accumulating somewhere.> Yes, the holder of the paper or MBS are short the puts. FNM does not disclose how large their negative curvature or it's duration to my knowlege. They hedge tons with JPM and others. They also float as many callable securities against the position as they can, from this standpoint YOU Germans are footing the whole thing -ggg- DAK

To: smolejv@gmx.net who wrote (33642)	5/14/2003 12:24:56 AM
From: EL KABONG!!!	Read Replies (1) \| Respond to of 74559

DJ, If the original mortgage had a prepayment clause in it that accounted for the future "lost" revenues (interest to the mortgagee), then your observation would be correct. Most (but not all) mortgages in the USA do not contain a prepayment clause. Therefore, all a borrower need do is to borrow enough money from Peter (the new lender) to pay off Paul (the old lender). Usually a title company or a lawyer will handle most of the details to ensure legalities, and to ensure that Paul is indeed paid off in a timely manner. It is the lender that assumes most of the risks on mortgage loans within the USA, including the risk of prepayment. Prepayment clauses, and accompanying prepayment penalties, do exist, just not to the extent that they used to. Most people I know (including me) wouldn't accept a mortgage from a lender that insisted upon a prepayment clause. KJC