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> Where was this rule when greedy banks sold them expensive mortgages ? Uhm, the government encouraged much of the mortgage lending you're referring to. The lo

> Where was this rule when greedy banks sold them expensive mortgages ? Uhm, the government encouraged much of the mortgage lending you're referring to. The loans themselves were artificially cheap. Unfortunately for borrowers, the houses were not.

InclinedPlane 13y ago
A lot of people thought those high risk mortgages were win/win. Best case scenario: the mortgage gets paid back at a healthy RoI. Better case scenario: the borrower defaults and the mortgage owners end up with real estate that is getting more valuable by the day. Of course, the borrower gets screwed but who gives a shit about them. And if the housing market tanks the whole thing falls apart, but the market can only go up, up, up!
- 7Figures2Commas 13y ago
  Your understanding of how mortgage-backed securities work is flawed. MBS holders have no control over how the collateral backing their securities (the houses themselves) are dealt with in a default. The servicers of the MBS are responsible for this. In other words, no investor buys MBS with the expectation of owning houses because that's simply not what happens. Out of all the "victims" in the housing collapse, MBS investors were arguably some of the more sympathetic. They were the true bag holders, overpaying (in the form of lower yields than was justified by actual risk) for lead that credit ratings agencies assured them was gold. Following the collapse, many any of them sued, alleging amongst other things, fraud. On the list of "victims", many but certainly not all borrowers were less sympathetic characters. Some individuals had no problem lying about their income, and many others took out adjustable rate mortgages with the incorrect assumption that they'd be able to flip their homes at a profit or rent them out when their payments increased. It's hard to see these folks as anything other than willing participants in the game.

InclinedPlane 13y ago

A lot of people thought those high risk mortgages were win/win. Best case scenario: the mortgage gets paid back at a healthy RoI. Better case scenario: the borrower defaults and the mortgage owners end up with real estate that is getting more valuable by the day. Of course, the borrower gets screwed but who gives a shit about them. And if the housing market tanks the whole thing falls apart, but the market can only go up, up, up!

7Figures2Commas 13y ago
Your understanding of how mortgage-backed securities work is flawed. MBS holders have no control over how the collateral backing their securities (the houses themselves) are dealt with in a default. The servicers of the MBS are responsible for this. In other words, no investor buys MBS with the expectation of owning houses because that's simply not what happens. Out of all the "victims" in the housing collapse, MBS investors were arguably some of the more sympathetic. They were the true bag holders, overpaying (in the form of lower yields than was justified by actual risk) for lead that credit ratings agencies assured them was gold. Following the collapse, many any of them sued, alleging amongst other things, fraud. On the list of "victims", many but certainly not all borrowers were less sympathetic characters. Some individuals had no problem lying about their income, and many others took out adjustable rate mortgages with the incorrect assumption that they'd be able to flip their homes at a profit or rent them out when their payments increased. It's hard to see these folks as anything other than willing participants in the game.