Profit From Mortgage Debt With MBS

n its May 2006 edition of Research Quarterly,the Bond Market Association estimated that mortgage debt represents $6.1 trillion of the $25.9 trillion bond market. As more people buy their first homes, move into bigger spaces, or purchase vacation homes, this borrowing is bound to expand. This situation creates an opportunity for astute investors, who can usemortgaged-backed securities (MBS) to own a piece of this debt. In this article, we'll show you how you can use MBS to complement your other fixed-income assets.

How They Are FormedMBS are debt obligations purchased from banks, mortgage companies, credit unions and other financial institutions and then assembled into pools by a governmental, quasi-governmental, or private entity. These entities then sell the securities to investors. 
Types of MBS

Pass-Through
The pass-through or participation certificate represents direct ownership in a pool of mortgages. You will get a pro-rata share of all principal and interest payments made into the pool as the issuer receives monthly payments from borrowers.

The mortgage pool will usually have a five-to-30-year maturity. However, the cash flow can change from month to month depending on how many mortgages are paid off early - this is where the prepayment risk lies.

When current interest rates decline, borrowers might refinance and prepay their loans. Investors then must try to find yields similar to their original investments in a lower, current-interest rate environment.

Conversely, investors can face interest rate risks when current interest rates go up. Borrowers will stay with their loans, leaving investors stuck with the lower yields in a rising current-interest rate environment.
There are several types of CMOs that are designed to reduce investors' prepayment risk, but the three most common are:

1. Sequential Pay CMOs
In a sequential pay CMO, CMO issuers will distribute cash flow to bondholders from a series of classes, called tranches. Each tranche holds mortgage-backed securities with similar maturity and cash flow patterns. Each tranche is different from the others within the CMO. For example, a CMO might have four tranches with mortgages that average two, five, seven and 20 years each.

When the mortgage payments come in, the CMO issuer will first pay the stated coupon interest rate to the bondholders in each tranche. Scheduled and unscheduled principal payments will go first to the investors in the first tranches. Once they are paid off, investors in later tranches will receive principal payments.

The concept is to transfer the prepayment risk from one tranche to another. Some CMOs may have 50 or more interdependent tranches. Therefore, you should understand the characteristics of the other tranches in the CMO before you invest. There are two types:

Planned Amortization Class (PAC) TranchePAC tranches use the sinking fund concept to help investors reduce prepayment risk and receive a more stable cash flow. A companion bond is established to absorb excess principal as mortgages are paid off early. Then, with income from two sources (the PAC and the companion bond) investors have a better chance of receiving payments over the original maturity schedule.

Z-Tranche
Z-tranches are also known as accrual bonds or accretion bond tranches. During theaccrual period, interest is not paid to investors. Instead, the principal increases at a compound rate. This eliminates investors' risk of having to reinvest at lower yields if current market rates decline.

After prior tranches are paid off, Z-tranche holders will receive coupon payments based on the bond's higher principal balance. Plus, they'll get any principal prepayments from the underlying mortgages. 

Because the interest credited during the accrual period is taxable - even though investors don't actually receive it - Z-tranches may be better suited for tax-deferred accounts. 

2. Stripped Mortgage Securities
Strips are MBS that pay investors principal only (PO) or interest only (IO). Strips are created from MBS, or they may be tranches in a CMO.

Principal Only (PO)Investors pay a deeply-discounted price for the PO and receive principal payments from the underlying mortgages.

The market value of a PO can fluctuate widely based on current interest rates. As interest rates drop, prepayments can increase, and the PO's value might rise. On the other hand, when current rates go up and prepayments decline, the PO could drop in value.

Interest Only (IO)An IO strictly pays interest that is based on the amount of outstanding principal. As the mortgages amortize and prepayments reduce the principal balance, the IO's cash flow declines.

The IO's value fluctuates opposite a PO's in that as current interest rates drop and prepayments increase, the income can go down. And when current interest rates rise, investors are more likely to receive interest payments over a longer period of time, thereby increasing the IO's market value.  

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The Advantages of MBS Direct

Our dedicated staff ensures complete satisfaction for your school, students, and faculty. Your school will discover clear solutions to its toughest textbook challenges. Students gain convenience in ordering, satisfaction through delivery, and helpful customer service. Faculty will enjoy free resources along with many value-added services that will assist them with education.

Whether you are overwhelmed by the day-to-day operations of textbook management, or you have frustrations stemming from an online vendor that repeatedly fails to deliver, you deserve a simple solution.

MBS Direct has developed a group of products and services specifically designed to alleviate your textbook problems. The services provided by MBS Direct are customized to fit your school's individual needs, which in turn allows you to focus on education—not textbook management.

MBS Direct relieves the burden, hidden costs, and hassles of textbook fulfillment—from online adoption management to direct-to-student billing and delivery. With MBS Direct, you and your staff can concentrate on what really matters—delivering the best education to your students.

With MBS Direct, you will free your staff to focus on education, focus your time on other educational endeavors, and save the money it takes to operate a successful textbook management program. We assume all textbook management tasks: adoption, acquisition, inventory management, order fulfillment, distribution, and customer service.

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ABOUT MBS DIRECT

MBS Direct will be a strategic partner in the academic excellence of students by delivering them educational tools, accurately and quickly, anywhere in the world; and by empowering and investing in our employees and infrastructure.

With MBS Direct, students can order new and used textbooks, supplemental materials, eContent, and a wide-variety of free resources. All inventory is based on course lists submitted by your school or institution and housed in our on-site warehouse. Best of all, there are no start-up or hidden fees for our services.We are proud partners of K-12 schools and higher education institutions helping them to deliver the best educational services to students. We provide our partner schools, students, and parents with a customized and user-friendly online bookstore.

Founded to Meet Your Demands

In 1994, Park University asked MBS to manage the textbook distribution for their extended learning program. Park University was faced with the daunting task of supplying course materials to their main campus in Parkville, Missouri as well as to 28 military bases throughout the United States. They were losing money due to high operational and shipping costs. Running a textbook program from their main campus became too overwhelming due to the excessive amounts of unsold, misplaced, and returned inventory. MBS was excited by the challenge and created an all-encompassing, customized, and streamlined textbook fulfillment program that assumed all responsibilities—student sales, inventory acquisition and management, and distribution. Park University's administrators saw great value in MBS's proactive response to their student demands and turned a textbook resource into a partner in education. The program was a success, and eventually lead to the formation of MBS Direct.

Industry-leading Products and Services

MBS Direct's headquarters is located in Columbia, Missouri. With decades of textbook management, delivery, and distribution experience, we understand the diverse needs of every partner. At MBS Direct, we pride ourselves on remaining proactive to anticipate needs, and to answer every question or concern promptly, with guaranteed satisfaction.

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Information Governance Solutions

MBS can provide your organization with a full suite of services and solutions to support your Information Governance strategy, customized to meet and grow with your business, operational and technology needs.

Records are the information assets of your organization. Moreover, records are growing at an explosive rate. Getting ahead of the records explosion is how executives and their trusted staff are staying protected and even generating new sources of value for their organization and their customers.

The business practice of Information Governance requires People, Process and Technology integration. Executed properly, your information governance strategy should protect your organization as well as improving:

• Employee productivity
• Customer satisfaction
• Data security
• Business intelligence
• Facility use

At Managed Business Solutions, we are committed to making a difference in our customers’ business.

We are Managed Business Solutions; a global IT services provider, focused on delivering high quality Business Technology and Consulting services under the principal of maximizing our client’s return on their investments.
Our accumulated Experience, Knowledge Capital and Skilled Resources allow your organization to benefit from business technology systems without the unpredictable budget variances and operational disturbances that come with deploying complex IT investments and strategies.

Today’s unprecedented data growth has created difficult challenges for many organizations’ IT infrastructures – including data center sprawl, poor performance of mission-critical systems, rising IT costs and e-discovery and compliance issues.

There is no “digital shredder” to get rid of old applications, documents
and other information that the organization is no longer using – so how can you put an end to sprawl?

• Dispose of expired information that is no longer of use to the business
• Protect and manage sensitive legal/compliance data cost-effectively
• Reduce unused enterprise information by up to 80%

Let Managed Business Solutions show you how this can improve performance and generate significant ROI for your organization.

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Managed Business Solutions (MBS)

Managed Business Solutions, LLC (MBS), a majority owned subsidiary of Sealaska, has provided complete IT solutions since 1993. MBS currently delivers global solutions to clients in North America, South America, Africa, Asia-Pacific, and Europe. MBS delivers solutions to Federal/Local Government and Commercial sectors alike.

We provide Application Support, Business Intelligence Solutions, Custom Application/Software Development, Records & Information Management Solutions, Conversion Services, Data Center Management, Hardware/Software Resale, Infrastructure Support, IT Assessments, Offsite Storage, and Staffing Services.

Our proven delivery methodology is focused on effectively and efficiently meeting your business needs. Our 24x7x365 Support services ensure business continuity in meeting production requirements.

Colorado Springs, Colo., Jan. 26, 2011   Managed Business Solutions (MBS), a Native 8(a) owned company and premier

provider of information technology based business solutions, is very pleased to announce Brenda Dukart has taken the

position of Diversity Business Development Manager.

Brenda will be responsible for introducing the MBS service and solution offerings to progressive companies who value

working with high performing minority‐owned companies, like MBS.  Brenda has worked with the finest Native‐owned

businesses, both large and small, in the commercial and government sector. She is passionate about helping customers gain

competitive business advantage through strategic information technology service and solutions.  

“Brenda will be a tremendous asset to our company. She has an extensive knowledge of building relationships with other

native companies,” said Jon Duncan, MBS president.  “Having her on board will enable MBS to rapidly meet our growing

diversity needs.”  

Brenda earned both a Master’s Degree in Strategic Communication and Leadership from Seton Hall University; and

a Bachelor’s Degree in Organizational Management from Alaska Pacific University. She has successfully completed training

with the Tuck School of Business at Dartmouth for “Building Successful Native American Businesses”.

Brenda is both Tsimpshian Indian from the Eagle Clan and Aleut/Alutiiq from Alaska, where she was born and raised.  Her

father is the late Cecil Barnes, one of the founders of the historic Alaska Native Claims Settlement Act (ANCSA).  Brenda

looks forward to working with the MBS team to introduce proven IT services and solutions, including the ANCSA

Shareholder Management System, to both Alaska Native and other mainstream corporations to help them streamline

processes and create greater economic value for their organizations.  

About Managed Business Solutions

MBS, a majority owned subsidiary of Sealaska Corporation, a Native corporation owned by more than 20,000 indigenous

shareholders.  MBS has provided complete IT solutions since 1993. MBS currently delivers global solutions to clients in

North America, South America, Africa, Asia‐Pacific, and Europe. MBS delivers solutions to Federal/Local Government and

Commercial sectors alike. We provide Application Support, Business Intelligence Solutions, Custom Application/Software

Development, Conversion Services, Data Center Management, Hardware/Software Resale, Infrastructure Support, IT

Assessments, Offsite Storage, and Staffing Services.  

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Discover the MBA (Professional)

The MBA (Professional) is a new, innovative and flexible program for part time students offered by Melbourne Business School.

A variant of the MBA, the MBA (Professional) is designed to meet the needs of working professionals. It has been developed based on feedback that the School has received from current and prospective students.

Our research identified a student need for a slightly shorter program than the MBS MBA. Students also expressed a desire for more flexible study options that fit in with busy work and family responsibilities. The MBA (Professional) has been designed with these needs top-of-mind. The result is a ground-breaking program that offers world-class learning experiences coupled with flexible delivery options.

The MBA (Professional) offers:

• An academically rigorous program taught by leading faculty
• A wide range of elective subjects which compliment core subjects and enable students to maintain a broad focus or concentrate on a preferred specialisation.
• Two modes of delivery: evening study mode and weekend study mode
• The flexibility to switch between delivery modes and vary study loads to suit personal circumstances
• The flexibility to transition from the MBA (Professional) to the MBS MBA
  
• Modern, state-of-the-art facilities.

We're excited about this new program and look forward to welcoming our first intake of students. This website will take you through the MBA (Professional). Please also consider attending one of our information sessions where you can talk to admissions staff. Alternatively contact our National Enquiry Centre for more information.

The MBS Experience 

professional peers

Melbourne Business School students learn from their peers. The experience of working in talented teams and debating issues with others from a wide range of professional and cultural backgrounds is a key dynamic at MBS. For this reason, we look for versatile and stimulating individuals who will contribute actively to the learning process.
Students bring diverse perspectives from their undergraduate studies and subsequent careers. They may have practical work experience as accountants, architects, bankers, editors, engineers, marketers, ministerial advisers, physicians and lawyers, as well as managers of manufacturing operations, performing arts companies, scientific research groups, government authorities or departments, and small businesses.

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system mbs

Power your bookstore with our industry-leading Retail Store Solutions
 
MBS started offering its innovative bookstore management systems more than 25 years ago. Today, our systems remain the foundation for a bookstore's operations as we have carefully crafted our own line of point-of-service systems, mobile devices, online solutions, and training sessions to ensure our customers are getting the most out of their management systems.

We frequently introduce expansions and improvements to these system components so our partners’ operations stay as progressive and trouble-free as possible. Whether you are seeking a total in-store solution to run your operations, or you want our hosting solution that allows you to effectively manage your bookstore without the hassles of complex computer servers, MBS provides all the hardware you need to position your store for success.

Regardless of your store’s size or range of operations, MBS can supply you with the innovative technologies that simplify your bookstore’s essential operations.

To learn more about how MBS can integrate its innovative line of textbook management products.

 RELATIONSHIPS

Customizing solutions for you

While we conduct business on a nationwide basis, it is still our approach to maintain a personable feel. We employ dedicated teams of customer service representatives, sales representatives, and account managers to ensure each of our bookstores and associated schools are offered the same attention to detail.

At the same time, however, we don't pigeonhole our bookstores into standardized textbook programs. We understand not all stores are equal in terms of needs and scope of operations, which is why we offer customizable solutions that work for you. Through consistent contact with your bookstore, we come to understand the needs of your business. Based off our professional assessments, we then offer unparalleled advice to maximize your success with the appropriate products and services.

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mbs text book

While today's bookstores heavily rely on retailing and merchandising to generate revenue and business growth, textbooks remain an important element. Fortunately, MBS has long been the industry leader in wholesaling textbooks, and we continuously look to improve our methods to bring the most innovative textbook solutions to our partner bookstores.

At MBS, we house an extensive inventory of more than 120,000 different titles at any given time, comprising the industry’s best mix of new and money-saving used titles. Aside from merely offering these textbooks, MBS also provides all of the necessary tools, support, and products to guarantee your textbook department is completely fulfilled.

The multitude of textbook products and services MBS offers isn’t limited to what you see here

SUPPLEMENTARY COURSE MATERIALS

Offering more choices

MBS offers an array of additional course materials and study tools, including charts, graphs, flash cards, and workbooks, that not only help your students earn better grades, they also provide an additional means of creating profit in your store.

Learn about Make The Grade, a program from MBS that supplies bookstores with this additional learning tool.

Make the Grade bolsters sales and students’ grades

Searching for an easy opportunity to not only maximize the success of your bookstore, but position your students to do the same? Look no further than our Make the Grade program.

Offering a variety of study tools including charts, tables, workbooks, and flash cards, Make the Grade is designed to help your student customers excel in the classroom.

By looking at the textbook titles recently used at your school, MBS generates a list of relevant study materials to help your students earn better grades and provide your bookstore an easy means of obtaining additional revenue.

Make the Grade is just one category of product add-ons we provide partnered bookstores to increase sales volume and keep students returning to the store—all to further our primary goal of simplifying your business.

e Books & OTHER DIGITAL OPTIONS

 Providing interactive alternatives
Realizing that today's students desire a more interactive learning tool, MBS offers eBooks and other digital content through our Universal Digital Textbooks (UDT) program. Downloaded directly to your students' desktop or laptop computers, eBooks offer your students several interactive features that serve to heighten the learning experience, including keyword search, note taking and note sharing tools, and highlighting.

Coupled with their convenience and portability, more students are beginning to utilize eBooks. In fact, we continuously strive to add more content from various publishing partners to meet this rising demand.

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