Re: Tea Party Rep: Bank Should Have Known I Wouldn't Be Able To Repay $2.2 Million Lo
The banks who sold the mortgages weren't being foolish. They just didn't care if the homeowner could pay the mortgage back because they knew that they were going to sell the mortgage to someone else, and therefor they wouldn't be on the hook when the homeowner defaulted.
Originally Posted by FilmFestGuy
The law used to require the bank making the mortgage to hold onto the mortgage, which was enough incentive to insure that the bank would not give mortgages to people who couldn't afford them, but that changed with bank deregulation (thank you republicans). The deregulation allowed banks to group mortgages together and sell peices of these grouped mortgages as securities. Institutions like Lehman Bros, BofA, Goldman Sach etc bought them up like candy. When the housing bubble burst, these institutions were on hook, and were in danger of failing. That's what led to the bank bailout (ie TARP) under bush*
Originally Posted by matchlight
Originally Posted by jaeger19