By Admin on Aug 5, 2009 in Corporations
harkkam asked:
Making bad loans and performing due dilligence are the originators responsibility. They would just write cheap mortgages and then sell them off to investment banks. Knowing full well that the individuals could not pay the money back. They would even decieve the investment banks on the income of the people to whom the loan was made out to.
Making bad loans and performing due dilligence are the originators responsibility. They would just write cheap mortgages and then sell them off to investment banks. Knowing full well that the individuals could not pay the money back. They would even decieve the investment banks on the income of the people to whom the loan was made out to.
The investment banks are fooled into buying high risk debt they might not have asked for, or they take risks beinging fully aware.
But its the Mortgage originators that walked off with the money from the fee’s paid to them by selling bad loans.
Its all that credit loan crap on tv you saw. Bad credit…no credit…no problem…this is what they were doing
The real problem was greed perpetrated by social engineering by the Feds.It is imposable to put blame on any one individual( Loan Originators) it was a combination of events which proved in the end to be a recipe for disaster and some Innocent people got hurt in the process.
like you this is my theory. If we put the two together I suspect we would find the somewhere in between
Steve L | Aug 5, 2009 | Reply
Greed is responsible, on the part of borrowers, bankers AND originators… plain & simple.
joseph.hussein.foust | Aug 6, 2009 | Reply
my theory is this: they were all in on it.
that’s not to say they were working together. the highest authority in lending allowed this to happen. then the originators noticed that these “bad loans” were not being rejected. then home buyers noticed that everyone and their dog was getting a house with little or nothing down. then the snowball effect came into play where it was repeated over and over and over…..
its kind of like ENRON. not everyone who benefited had conspired in a group in some big boiler room. the workers just noticed that certain things were not being checked and so they let the worst of themselves take over. in the case of ENRON even government officials and higher ups and middle management know what was being allowed. they all profited.
viajero_intergalactico | Aug 9, 2009 | Reply
Your process is flawed.
What’s happening began back in the 70s. The community revitalization act made bank to loosen financial requirements when doing mortgages.
Now what happened, is Banks and Lenders offered people huge ARMs and people bought homes with payments they knew they couldn’t make.
Now the banks and lenders sell the mortgages to Fannie Mae and Freddie Mac. They do this so they can go back and lend more money.
Now Fannie and Freddie took this mortgage paper and bundled them into securities and sold them. Since they were backed by govt, These securities got AAA ratings. The investment banks like Bears Stearns and AIG bought these AAA securities, then cut them up into small pieces and resold the securities. These securities also got AAA ratings. However at the bottom where all these subprime mortgages that defaulted.
If blame is to be placed, the majority has to go to those individuals that took out huge mortgages that they knew they couldn’t afford. You can’t really blame the banks and Lenders because the individuals didn’t have to take everything the banks were offering.
AJ | Aug 12, 2009 | Reply