Quote:
Originally Posted by sokinwet
Kind of a "cliffnotes" version! You want to by a home. A "predatory" lender; usually an " XYZ Mortgage Co" offers you a "deal" mortgage; generally an ARM that you probably will have a hard time affording but...(the hook) you will be able to refinance to a more affordable fixed 30 yr. once you get in the house. The lender sells the loan on the secondary market to investors who buy it at a discount. They will resell it again or hold it hoping for the long term profit over the loan term. You don't get your 30 yr. fixed because the Predatory lender is long gone with his profit and the new holder of your mortgage isn't about to give you a new loan because your credit score is "0" or perhaps the value of your home isn't what it was. Add in bundled mortgages and mortgage backed securities a depreciating housing market and we here we are today. Plenty of blame..starting with the uneducated borrower, greedy finance industry, government regulators alseep at the wheel or in bed with those they were "regulating". So in the end the loser is us.
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Sounds like the secondary market investors, by buying unworthy loans and then not giving the new loan that was promised by the original "predatory" lender, is stuck with the bad loan and by stupidity becomes the predator against himself. Can there be that much stupidity in this convuluted process, or are the parties depending on some invisible hand to come to the rescue? The Government, perhaps? And if so, how in the world did the government get involved in such a mess to begin with? Did it have something to do with beginning the process? If the government did not, even with the best intentions, insert itself into the housing market beyond the most basic regulatory necessity, would we be at this place now?
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