Wednesday, October 15, 2008

Topics For Discussion II

The growth in mortgage lending over the last 20 years is due in part to several factors, some of which arose from imprudent and inadequate regulators:

- The expansion of Fannie Mae, Freddie Mac and Federal Home Loan operations

- The development of the loan securitization market

- Cavalier underwriting criteria (low documentation / no documentation loans)

- The expansion of sub-prime lending

- The marketing of sophisticated loans (adjustable rate mortgages, pay option mortgages, piggy back loans) to under-informed consumers.

- Accommodative monetary policy

- Rating agency lack of sophistication

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