Definition of Net Interest Margin Securities – NIMS

Net Interest Margin Securities – NIMS

Net Interest Margin Securities – NIMS  is a protection that allows holders to access unwanted money moves from securitized home loan private pools. In a common Net Interest Margin Securities (NIMS) transaction, unwanted money moves from the securitized home loan private pools are transferred to a trust account. Traders in NIMS receive interest prices from this trust account.


Net Interest Margin Securities – NIMS

The creation of NIMS is facilitated by the fact that numerous securitized home loan private pools contain subprime loans with interest levels that are much higher than the common prices offered to mortgage-backed protection investors. The bigger the difference in these interest levels, the more the money moves generated by the MBS and consequently the higher the value of the NIMS. Evidently, the value of the NIMS can turn down quickly if there is a significant increase in the default rate of the loans held in the MBS and a subsequent decrease too much money moves.

The values of NIMS are based on the value of the money moves a mortgage-backed protection receives. Because the common subprime home loan securitization often is collateralized by loans that carry interest levels above the eye levels paid to the investors in the mortgage-backed investments, some of the difference goes to the senior creditors to cover loan losses and overhead, but the leftovers make for this second class of investments.

Previous Post
Newer Post