http://www.mortgage--loans--blog.com/personal-finance/why-did-the-investment-bankers-think-it-was-profitable-idea-to-securitize-bundle-bad-mortgage-loans A blog on mortgage loans Sun, 20 May 2012 14:02:13 +0000 http://wordpress.org/?v=2.7 hourly 1 http://www.mortgage--loans--blog.com/personal-finance/why-did-the-investment-bankers-think-it-was-profitable-idea-to-securitize-bundle-bad-mortgage-loans/comment-page-1#comment-90 Stu Tue, 05 Aug 2008 05:18:03 +0000 http://mortgage--loans--blog.com/personal-finance/why-did-the-investment-bankers-think-it-was-profitable-idea-to-securitize-bundle-bad-mortgage-loans/#comment-90 The big problem comes in when the people originating the loans are not the people that end up holding the loans. They originator is getting paid to originate loans and frankly doesn't care if the loans will get paid, because he isn't going to be holding the loan - it will be sold to someone else. There is no incentive for the originator to do extensive checks to see if the person getting the loan can actually pay it off. All is good and fine if the housing market continues to go up as people can continuously refinance. However, that can't continue forever and now someone must pay the price for this. That should be the loan originators and the people that applied for these loans. The big problem comes in when the people originating the loans are not the people that end up holding the loans. They originator is getting paid to originate loans and frankly doesn’t care if the loans will get paid, because he isn’t going to be holding the loan - it will be sold to someone else. There is no incentive for the originator to do extensive checks to see if the person getting the loan can actually pay it off. All is good and fine if the housing market continues to go up as people can continuously refinance. However, that can’t continue forever and now someone must pay the price for this. That should be the loan originators and the people that applied for these loans.

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