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<p>[QUOTE=&quot;medoraman, post: 1256281, member: 26302&quot;]I asked you to PM me if you wanted the details, but you insist on discussing it here. Ok, here we go:</p><p><br /></p><p>In a CMO you take the underlying securities and develop tranches of the debt. THese tranches can be structured however you like, usually with senior and subordinated shares. The legal structure that owns the securities is the entity responsible for the payments. THe originator donates the mortgages in exchange for shares in which the legal structure then cashes out as tranches are sold. Based upon how CMO&#039;s have been structured since the early 90&#039;s the originator does not keep residuals, and sells the remainder tranche the market for a severe discount.</p><p><br /></p><p>That is about as simply as they can be explained, and there are tons of details regarding the tranche structuring.</p><p><br /></p><p>Happy Fatima? How much of this structuring is subrogatable to the originator? None, except to the extent that there is incomplete underwriting and then just to the extent the originator gets to replace with a like kind security.</p><p><br /></p><p>This is the background and knowledge of what you are actually talking about that I said was lacking in your posts. THis is not any personal anecdotes, this is a quick lesson in actual mortgage securitization process. </p><p><br /></p><p>Now, I await your rebuttal of this structure and how the legal entities are broachable or unwindable.[/QUOTE]</p><p><br /></p>

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