Packaging Mortgages into Securities

Reply Sat 6 Aug, 2011 03:46 pm
I believe before the mortgage meltdown investment banks used to purchase mortgages from mortgage banks, package them and later sell them as a security. But prior to the sale as a security, it would hire a firm (e.g., Clayton Holdings) to evaluate the loans. That firm (e.g., Clayton Holdings) would produce a document summarizing its findings (i.e., amount and detail on bad loans). I believe that document was made available to prospective purchasers of the securities.

Why didn't the investment banks turn back the bad mortgages to the mortgage banks?
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Reply Sat 6 Aug, 2011 07:18 pm
cause there were fees
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