Securitization “à la Brésilienne”

Dear Erika:

You are a good writer and I found your thesis an excellent read. Here are my comments:

A comprehensive analysis of the genesis of securitized real estate loans in Brazil . Introductory and background material are a bit on the long side. Well written and thoroughly illustrated. One nagging question which could have received more attention is how potential future inflation is/should be incorporated in the design and pricing of securities. Not long ago – as late as the 90s – Brazil struggled with hyperinflation and lopsided indexation schemes. Given the long term nature of mortgage and MBSs are there provisions incorporated in the securities which are offered. Would some form of indexation allow the borrower to lower its cost of capital. Given the boiling hot real estate market in Brazil what parallel could you establish with the US just before sub-prime. Are current practices in brazil enough to prevent a similar occurrence?

Well done . You are now the official expert on Securitization “à la Brésilienne”

All the best,

Laurent Jacque

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