Yield PRO TV Rate Desk September 2, 2020

September 2, 2020 edition of Yield PRO TV Rate Desk with Michael Thomas. Relationships of leverage to risk; probability of loss vs loss given default and which carries more risk.

Rate Desk notes September 2, 2020
• Indices up, rally of record closings
• Crude $41.35
• UST yields .65
• 223(f) 2.15%
• 221(d)(4) 2.75%
• Fannie 2.95%
• Freddie 2.95%
• US passed 100% debt-to-GDP
• Is leverage a bad thing?
• Relationship of leverage to risk
• Probability of loss vs loss given default
• HUD FHA leverage provides better cash-on-cash return
• Low rate + longer term = lowest loan constant
• 11K HUD FHA mortgages—only 6 were 30-days past due
• GSEs use interest-only
• Which carries more risk? You decide?
• Lower leverage does not mean lower risk