Methods and products for providing incentive compatible mortgage loans

摘要

A method for efficient first mortgage loans including the steps of identifying suitable borrowers for a marginally priced mortgage loan, determining an aggregate asset value of property owned by the suitable borrowers, determining a capital structure of the marginally priced mortgage loan for the respective property as between debt and equity, tranching the debt capital structure into a plurality of debt tranches, wherein lowest loan to value tranches have seniority over higher loan to value tranches, assigning each tranche an interest rate based upon a plurality of criteria including probability of default, correlation of default, and credit market conditions, creating a structured note which provides legal rights for each such tranche in a bankruptcy remote issuance entity and securitization or sale of such structured notes to investors.