Asset-backed securities, mainly those having a mortgage as collateral, were the major conduits of systemic risk throughout the capital markets before the 2008-crisis. This risk materialized in an actual crisis when the real estate bubble burst after being inflated by a generous offer of credit, absorbed in the market via inaccurately rated securities, bundled into the financial product called Collateralized Debt Obligation (CDO). Credit rating agencies had rated them inaccurately, considering only the entire economy’s prior general trends, which made investors deem them as safe as sovereign bonds of the prevailing western nations. Moreover, these products are opaque bundles of prior securitized assets, and nobody other than the banks that structure them knows what is inside. Due to this opacity, agencies never analyzed credit risk into these products by an individualized assessment of each credit comprising them. In the case of the real estate CDOs, collaterals mainly were subprime mortgages’ receivables. The American land registry system must change to provide an individual analysis of these credits, including in the CDOs, by offering a tool for tract indexing them and minimizing informational asymmetries. In addition, it must embed some characteristics of the system called “Registration of Rights”, which is current in many European countries nowadays. This is the core of this work proposal.
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