| These firms are responsible for writing mortgages for an average of 125% loan to value for people without proof of income. They attracted them to these commitments by offering discounted rates in the first 2 or 3 years of the 25 to 30 year terms. After the `teaser` rates matured, and the payments went up, people defaulted on their mortgages and foreclosures started. However these banks didn`t care because they had already sold their mortgage portfolios in the money market many times, bringing in great returns for their investors. Now those in the know have sold out and the suckers want sympathy for investing in a company that can`t run their scam any longer. The good news is that we have just about gotten to the end of the teaser rate mortgages so the money markets may be able to trust subprime paper again. I do feel sorry for the innocent investors who got on the gravy train too late but especially for commercial paper investors who thought they were buying solid mortgages |
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