tag:blogger.com,1999:blog-4159906646513306121.post6624626675003880384..comments2023-11-19T20:38:50.237-08:00Comments on Economic Logic: US local lenders knew about the housing bubbleEconomic Logicianhttp://www.blogger.com/profile/10171296292101248614noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-4159906646513306121.post-47039899205253725602013-04-30T15:05:23.806-07:002013-04-30T15:05:23.806-07:00The unsaid twisted incentive is obviously securiti...The unsaid twisted incentive is obviously securitization. Now that it's been said, could it be that the originate-for-sale lenders were underpricing (in terms of fees, points, etc.) as well as selling what they knew to be junk, making it unprofitable for local lenders to operate where the originate-for-sale lenders operated on a large scale? There's quite a difference in incentives between a lender who holds a mortgage to maturity and one who originates for sale - the originate-for-sale lender seeks volume and discounts risk, whereas the traditional hold-to-maturity lender seeks a stable return from lending.Anonymousnoreply@blogger.com