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It's easier to sell loans that are likely to get paid back, isn't it? And at a higher price.
by xlnt 19y ago
It's easier to sell loans that are likely to get paid back, isn't it? And at a higher price.
- jauco 19y agodepends on what you mean by sell. But the way I understand it, it's way easier to sell loans without caring if they get paid back. Because then your essentially expanding your market to include 'people who won't pay back'. Bigger market means more sells. Normally you would exclude those people because you eventually want your money back with interest, but the sellers in this particular story didn't care about that. (It wasn't their money)
- xirium 19y agoIt doesn't matter if the morgages are repaid and it may even be beneficial to bankers if there is a small level of defaulting. Unlike junk bonds, resold mortgages have an underlaying value in property. Unfortunately, beyond a small level of defaulting, a glut of unsold property decreases property prices, decreases the value of already resold mortgages and make property more affordable to nieve investors.