Monday, September 29, 2008
Sage of Omaha got it right – so why not everyone else?
A subsidiary to Buffett's Berkshire Hathaway was also involved in lending to low income households but has managed to maintain profitability and has a low foreclosure rate. How? Because they avoided securitisation and so had to take responsibilty for the quality of their loan book. They also made sure loans were actually affordable and most importantly that the buyers were buying for a home, not a speculative investment. It all makes so much sense - so why couldn't all mortgage lenders have followed Buffett's model?