Friday, June 3, 2011
Let me arrange loans to those I know can’t afford it and then sell it on
Unusual alliances have sprung up in opposition to tighter lending standards (homowner-ists). "For the uncommon alliance, the first point of attack is on a proposal that would require sellers of mortgage-backed securities to retain part of the risk should a package of loans go sour. The sellers would have to keep on their books at least 5 percent of the value of any baskets of loans they purchase from lenders and then resell to investors" So they will have 'skin in the game' and will have every incentive to check that someone they arrange a loan to can actually afford to repay. What's not sensible about that?