17 July 2008

Why didn't they do this from the start?

The American Securitization Forum has a plan to increase the supply of mortgage loans available and lower their cost by providing greater transparency in mortgage backed securities.

"Pools of mortgages, for example, could be structured so that all the loans
in them share many of the same traits. One pool might only contain loans from
prime borrowers who have fully documented their income and their assets, put
down a down payment of at least 20% and have credit scores of 720 or
greater."

...

"On the other hand, more risk-tolerant investors might prefer a piece of a pool featuring all subprime borrowers with low credit scores that would offer a higher rate of return. The key is that each of these investors would know what they are buying."

Why didn't they think of this years ago?

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