What is the 48 hour rule in real estate?

investopedia.com - 48-Hour Rule Definition - Investopedia

How to make yourself be happy?

10 Simple Ways To Make Yourself Happy Take 10 Deep Breaths. Our first step to make yourself happy might sound trivial at first, but bear with us....

Last updated Nov 12, 2021

What are the 5 lucky charms?

“Hearts, Stars and Horseshoes, Clovers and Blue Moons, Hourglasses, Rainbows, and Tasty Red Balloons!”

Last updated Oct 6, 2020

Awaken your dormant DNA ability to attract wealth effortlessly

The simple yet scientifically proven Wealth DNA method laid out in the report allows you to effortlessly start attracting the wealth and abundance you deserve.

Learn More »

Promotion

What Is the 48-Hour Rule?

The 48-hour rule is a requirement that sellers of to-be-announced (TBA) mortgage-backed securities (MBS) communicate all pool information regarding the MBS to buyers before 3 p.m. Eastern Time, 48 hours before the settlement date of the trade. The Securities Industry and Financial Markets Association (SIFMA) enforces this rule. SIFMA was formerly known as the Public Securities Association or Bond Market Association. Key Takeaways The 48-hour rule refers to a part of the mortgage allocation process related to the buying and selling of to-be-announced (TBA) mortgage-backed securities (MBS). The 48-hour rule stipulates that the seller of an MBS notifies the buyer with the details of the underlying mortgages that make up the MBS by 3 p.m. Eastern Time, 48 hours before the settlement date.

The Securities Industry and Financial Markets Association (SIFMA) enforces the 48-hour rule.

When an MBS is traded in the secondary market, the underlying mortgages are not known, which helps facilitate trading and liquidity. Certain information is agreed upon when an MBS trade is made, such as the price, par, and coupon, but not the underlying mortgages. The TBA market is the second most traded secondary market after the U.S. Treasury market.

Understanding the 48-Hour Rule

An MBS is a bond that is secured, or backed, by mortgage loans. Loans with similar traits are grouped to form a pool. The pool is then sold as a security to investors. The issuance of interest and principal payments to investors is at a rate based on the principal and interest payments made by the borrowers of the underlying mortgages. Investors receive interest payments monthly rather than semiannually. A to-be-announced (TBA) trade is effectively a contract to buy or sell mortgage-backed securities (MBS) on a specific date. It does not include information regarding the pool number, the number of pools, or the exact amount involved in the transaction, which means the underlying mortgages are not known to the parties. This exclusion of data is due to the TBA market assuming that MBS pools are more or less interchangeable. This interchangeability helps facilitate trading and liquidity. The 48-hour rule is part of the mortgage allocation process, the period when the underlying mortgages will be assigned and made available to a specific MBS, which was created to bring transparency to TBA trade settlements.

Can screaming make a baby deaf?

Key points about noise-induced hearing loss Your child's inner ears may be damaged if he or she is around extremely loud noises or around loud...

Last updated Nov 4, 2020

What are the three foods that stop memory loss?

What are the foods that fight memory loss? Berries, fish, and leafy green vegetables are 3 of the best foods that fight memory loss. There's a...

Last updated Oct 24, 2021

Awaken your dormant DNA ability to attract wealth effortlessly

The simple yet scientifically proven Wealth DNA method laid out in the report allows you to effortlessly start attracting the wealth and abundance you deserve.

Learn More »

Promotion

The 48-hour rule states that the seller of a specific MBS must make the buyer of that MBS aware of the mortgages that make up the MBS 48 hours prior to the trade settling. Because of the standard T+3 settlement date, this usually occurs on the day after the trade is executed.

The 48-Hour Rule as Part of the TBA Process

The TBA process benefits buyers and sellers because it increases the liquidity of the MBS market by taking thousands of different mortgage-backed securities with different characteristics and trading them through a handful of contracts. Buyers and sellers of TBA trades agree on a few necessary parameters such as issuer maturity, coupon, price, par amount, and settlement date. The specific securities involved in the trade are announced 48 hours before the settlement. The TBA market was established in the 1970s to facilitate the trading of MBS issued by Fannie Mae, Freddie Mac, and Ginnie Mae. It allows mortgage lenders to hedge their origination pipelines. The TBA market is the most liquid secondary market for mortgage loans, resulting in high levels of market activity. In fact, the amount of money traded on the TBA market is second only to the U.S. Treasury market.

Example of the 48-Hour Rule

Company ABC decides to sell a mortgage-backed security (MBS) to Company XYZ and Company XYZ accepts. The sale will take place on Tuesday. On Tuesday, when the sale is made, neither Company ABC nor Company XYZ knows the underlying mortgages that make up the mortgage-backed security (MBS). The standard industry settlement is T+3 days, meaning this trade will settle on Friday. According to the 48-hour rule, on Wednesday before 3 p.m. Eastern Time, Company ABC will have to notify Company XYZ of the mortgage allocations it will receive when the trade settles.

investopedia.com - 48-Hour Rule Definition - Investopedia

What is the most stressful color?

red According to color psychologists, the most stressful and anxiety-inducing color is 'red'. Red room ideas can be too intense for some people –...

Last updated Jan 28, 2019

Who was the woman with the alabaster oil?

And what did these seven devils signify, if not all the vices? There it was—the woman of the “alabaster jar” named by the pope himself as Mary of...

Last updated Jul 21, 2020

Awaken your dormant DNA ability to attract wealth effortlessly

The simple yet scientifically proven Wealth DNA method laid out in the report allows you to effortlessly start attracting the wealth and abundance you deserve.

Learn More »

Promotion

What is the rarest birthday to be born on?

Christmas day The rarest birthday of the 365 annual calendar days is Christmas day, Dec. 25. If your birthday is New Year's Day or Christmas Eve,...

Last updated Sep 2, 2018

Awaken your dormant DNA ability to attract wealth effortlessly

The simple yet scientifically proven Wealth DNA method laid out in the report allows you to effortlessly start attracting the wealth and abundance you deserve.

Learn More »

Promotion

Why money is exist?

medium of exchange, something that people can use to buy and sell from one another. Perhaps the easiest way to think about the role of money is to...

Last updated Feb 19, 2019