Banks were forced by threat of legal action from the federal government to make home loans to those who could not possibly make the payments once the period of low interest expired. To save them selves from collapse, they repackaged these bad loans and sold them to other financial institutions. When the foreclosures against the borrowe…
Banks were forced by threat of legal action from the federal government to make home loans to those who could not possibly make the payments once the period of low interest expired. To save them selves from collapse, they repackaged these bad loans and sold them to other financial institutions. When the foreclosures against the borrowers began, it all collapsed. Recently they have begun forcing the same program upon banks.
Yes, but that was the result of being forced by the government to make the bad loans. While they made the decision to go this route, I guess they could have just gone under, it was government action that forced them to come up with such a drastic measure.
Banks were forced by threat of legal action from the federal government to make home loans to those who could not possibly make the payments once the period of low interest expired. To save them selves from collapse, they repackaged these bad loans and sold them to other financial institutions. When the foreclosures against the borrowers began, it all collapsed. Recently they have begun forcing the same program upon banks.
But they then bundled them and sold them as assets for investors...
Yes, but that was the result of being forced by the government to make the bad loans. While they made the decision to go this route, I guess they could have just gone under, it was government action that forced them to come up with such a drastic measure.