Correspondent lenders are small lenders who do have the right to extend loans on their own risk and have the necessary funds to do so. After a loan is closed a correspondent lender will rarely keep it in their portfolio, selling it to a larger wholesale lender.
Unlike a commercial bank, which offers checking accounts, CDs and loans, an investment bank finances offerings of stocks, bonds and other investments.
Piggyback home loans, defined:
A piggyback is a second mortgage taken out at the same time as a first mortgage, as a way of borrowing a larger total amount. The first mortgage is for 80 percent of property value, and therefore does not require mortgage insurance, while the piggyback is for 5 percent, 10 percent, 15 percent or 20 percent of value. Instead of a mortgage insurance premium, the borrower pays a higher rate on the piggyback than on the first mortgage.
Definition – the difference between a write-down and a credit loss:
Investment banks and the investment-banking units of financial conglomerates mark their assets to market values, whether they’re loans, securities or collateralized debt obligations, and label that a “writedown” when values decline.
SIVs are investment vehicles which raise money in the short-term commercial paper market and use it to invest in longer-term assets, such as mortgages. In many cases investors let their money roll over, but recently investors have been demanding their money back. It has obliged many of the SIVs to make a forced sale of their assets at a time when the assets themselves are also losing their value.