In the leadup to the financial crisis, lenders did some pretty silly things. The securitization bonanza and the attendant proliferation of the “originate to sell” model drove lenders to adopt increasingly lax underwriting standards.
JPMorgan Chase disclosed on Wednesday that it faces a criminal and civil probe over whether the bank sold risky mortgage-backed securities to investors before the financial crisis, reports New York Times DealBook.
Earlier this year, as the US auto sales miracle unfolded on the back of record loan terms and record high average monthly payments, we continually argued that underwriting standards were likely to deteriorate going forward as competition for the finite pool of creditworthy borrowers heats up.
The Spanish banking system is in far worse shape than most realize because of unrealized losses related to Spain's imploded housing bubble. Various austerity measures and tax hikes to bail out French and German banks will greatly exacerbate this problem.
Please consider Spain Banks Face 43% Price Fall on Repossessed Homes