MBS - Mortgage Backed Securities
https://twitter.com/unusual_whales/status/1566583151933231104
minority communities
based on home location
Oh good, this won't turn into defacto red lining.
Like, on the one hand, the zero down / zero closing cost deal would legit open a lot of doors for people... if it had been offered back when rates were under 3%
Now that rates are up (and God even knows what they're trying to charge these marks) I'm excited to see the outreach pay big dividends.
The 2008 crisis with a little red lining mixed in for flavor. Love this Finance Cinematic Universe we have going on. They’ll call the end of this arc Endgame too
this'll wind up being even more lubricant on the gentrification machine because there's gonna be a shit ton of flippers using these loans
That comes a little bit later when they try to revitalize the petrodollar.
I mean, it says eligibility is based on income. that's not a NINJA loan. ninja = No Income No Job.
i definitely don't mean to assume or imply that BoA isn't going to eff these people over with some kind of heinous terms. probably in the rate, some PMI/escrow black magic, or some kind of ballooning ARM. the internal logic to lending is that someone with capital makes the borrower prove they deserve better terms because they are less likely to default. a safe borrower, though safe, does not generate the profit that a "risky" lender does... so of course the lender is going to push the shittiest loan first.
i knew all this in basic theory, but after going through the "i'm a good little boy" dance to get into a mortgage, it all became very real, especially the conflicting incentives of the loan originator. they act like i'm the right kind of client, but really i'm the low margin asset on their balance sheet. they act like they don't want the cash poor minority with weird credit, but that person is gonna print money for them.
That's the trick: they spend a decade or so making people do The Goodest Boy Dance to get low-risk investments on the books. Then once the contradictions of capital start rearing their ugly head and the market begins to sour, they open up the floodgates to all the high risk folks. Then they bundle all your investments together and resell them as Certified Very Safe Trust Me Bro. The poor suckers who buy those end up holding the bag. Tale as old as time.
Banks sell mortgages to people who are statistically unlikely to pay them back, especially in aggregate. Sure, some people who are perfectly capable of paying it back will gain access who didn’t have it prior. But on average, they’re risky loans. And they tend to be predatory. Lots of them involve teaser rates so that payments are low at first and the skyrocket later on or have giant lump sum payments.
A Mortgage Backed Security is an asset made up of thousands of mortgage contracts. So you invest in them and their value goes up as the value of the property goes back and they stay current on payments. Ratings agencies will rate different contracts depending on how risky they are. The 2008 crisis was caused by these shitty mortgages getting packaged alongside better mortgages and sold as a whole new product, which was artificially boosted by ratings agencies. So people were investing in fundamentally unstable assets because they were running out of more reliable ones and capitalists can’t help themselves
Oh yes, I see, so they're doing the thing where they turn debt ownership into a speculative asset again, very unfortunate.
