I used to think that banks kept (were stuck with) the loans they made, but many loans are sold to pension funds etc. that are trying to chase higher returns to meet obligations to retirees. The originators don't need to care about the soundness of the loan. They just want their commission. The problem is that if (when) home prices fall, the value of the investment (collateral) disappears. Its a catch-22. If they don't renegotiate the interest rate, more people will walk away from a home that is worth less than the amount they owe. If they do renegotiate the loan, …
- Joined July 25, 2007
- Last Visit July 25, 2007
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