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Gene
climber
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Feb 27, 2009 - 04:15pm PT
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And because not enough fees and profits were being generated by buying and selling mortgages, slicing and dicing, mixing, repackaging, insuring and trading them, the bright guys decided that they could create a whole new market by developing products in which those who didn’t own any of these mortgage securities could play. Highly leveraged financial contracts could be bought and sold that would be triggered by the financial performance of the gazillion parts of the bundled mortgages. Folks several levels removed from the home owner, the mortgage lender, and who had absolutely no skin in the home ownership game could trade these products – the value of which was derived from something they had no financial interest in. Gotta love it.
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bachar
Gym climber
Mammoth Lakes, CA
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Topic Author's Reply - Feb 27, 2009 - 06:58pm PT
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Declare bankruptcy and get a court ordered "cramdown" of the principal?
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ontheedgeandscaredtodeath
Trad climber
San Francisco, Ca
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Feb 27, 2009 - 07:39pm PT
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Cramdowns are routine in commercial matters and plenty of lending goes on.
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monolith
Trad climber
Berkeley
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Feb 27, 2009 - 07:44pm PT
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I thought cramdowns could only be done on second homes.
See this.
The Dems do have a bill pending to allow cramdowns on primary residence, but it's not law yet.
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ontheedgeandscaredtodeath
Trad climber
San Francisco, Ca
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Feb 27, 2009 - 08:02pm PT
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Fatty, I should have said commercial bankruptcies.
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