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SportTrac Discussion
General Sport Trac Discussion
Obama admin pushing banks to offer sub-prime mortgages again...
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<blockquote data-quote="Thomas Rogers" data-source="post: 963051" data-attributes="member: 60724"><p>Sub-prime in itself is not bad, as long as those that sell them are vested in them. The problem comes in when sub-prime loans are sold, then those loan packages are sold in bulk via CDOs and those CDOs are given AAA ratings. What then happens is that people, institutions, etc purchase those supposedly high quality CDOs that are in fact toxic. Whn the marks correct and foreclosures happen, those that sold the mortgages are not harmed, becauase they no longer own or hold the mortgage. Those that invested in the CDOs get screwed. The sad part is that those financial institutions that sold the toxic CDOs knew they were crap and would fail, so they purchased additional derivatives betting on their failure. Not only that, but due to the way these hedge funds worked, anyone could buy them, with thousands of buyers betting against these mortgages... Several getting paid with each single failure. So, when foreclosures happened, those holding the CDOs went broke, while those selling and betting against them got rich.</p><p></p><p></p><p></p><p>The problem wasn't subprime loans. The problem was the fact that for many that sold them they never had any innate skin in the game that they wouldn't get defaulted on. The true indicator is whether or not the mortgage lender is dedicated to holding that loan. Find one that does and you will be better served in the long run, IMHO.</p><p></p><p></p><p></p><p>TJR</p></blockquote><p></p>
[QUOTE="Thomas Rogers, post: 963051, member: 60724"] Sub-prime in itself is not bad, as long as those that sell them are vested in them. The problem comes in when sub-prime loans are sold, then those loan packages are sold in bulk via CDOs and those CDOs are given AAA ratings. What then happens is that people, institutions, etc purchase those supposedly high quality CDOs that are in fact toxic. Whn the marks correct and foreclosures happen, those that sold the mortgages are not harmed, becauase they no longer own or hold the mortgage. Those that invested in the CDOs get screwed. The sad part is that those financial institutions that sold the toxic CDOs knew they were crap and would fail, so they purchased additional derivatives betting on their failure. Not only that, but due to the way these hedge funds worked, anyone could buy them, with thousands of buyers betting against these mortgages... Several getting paid with each single failure. So, when foreclosures happened, those holding the CDOs went broke, while those selling and betting against them got rich. The problem wasn't subprime loans. The problem was the fact that for many that sold them they never had any innate skin in the game that they wouldn't get defaulted on. The true indicator is whether or not the mortgage lender is dedicated to holding that loan. Find one that does and you will be better served in the long run, IMHO. TJR [/QUOTE]
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SportTrac Discussion
General Sport Trac Discussion
Obama admin pushing banks to offer sub-prime mortgages again...
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