"... Bank of America has backed a $10 billion program from Boston-based brokerage Neighborhood Assistance Corporation of America (NACA), to offer zero-down mortgages to low-income borrowers with poor credit scores, according to CNBC. NACA has been conducting four-day events in cities across America to educate subprime borrowers and then lend them money - with a 90% approval rate and interest rates around 4.5%..." "...NACA receives a $3,000 commission per loan issued..." There you go. 1. Make poor/weak loans. (No underwriting required, other than verifying the borrower can "fog a mirror") 2. Make $3,000 commish for each approval 3. Don't worry about defaults. The government will make tax payers bail out the banks. Now THAT'S what I call a "business model".
As long as Wall Street does not create derivative products based on them and go all-in with borrowed cash on them, we can still survive. These sub-prime loans have existed for years.
ON, NTSA (Oh No, Not This Shit Again.) "To participate in the NACA lending scheme, borrowers can have credit scores - but will need to go through the education course and submit all necessary documents, "from income statements to phone bills," reports CNBC. Then they undergo budget counseling to ensure they can afford the mortgage." Yes, that will solve the whole problem. "Education (A 30-minute online video about what a loan is) and documentation such as "phone bills". I really really wish that was a TheOnion article.
Of course...magnified garbage is a bigger pile of it. But mortgage paper of any grade is securitized, making it investment paper...and that ain't good when it's bad.