Mike, both you and Jonathan are spot on. Here's the rest of the story, as it were.Mortgage Brokers originated loans for submission to underwriters at lenders who then sold the loans to Wall Street mandarins who then chopped them up into acronyms with Triple A ratings and sold them at great profit to institutional investors. Brokers just sold the programs offered by the lenders. Lenders just offered the products that Wall Street demanded.
Since Wall Street could redefine crap as investment grade secured debt obligations 'til the cows came home, The spigot of cheap money for unqualified borrowers stayed on WAY too long.
The cows have come home, and the guys who essentially said 'approve everything, ask no questions, we just need product' aren't being investigated. It's the guys at the mouth of the pipe who read the UW guidelines, shrugged, and submitted.Why is the broker industry being closed rather than the wall street packagers being jailed?
the bill also bars any liability for "pools of loans" or "securitization vehicles". The critical language is buried in proposed Section 129B(d)(9). For most subprime mortgages, trusts, which are nothing more than pools of mortgage loans, are the entities that are the legal owners of the mortgage, and the only entity with any assets or ability to provide consumer redress. This is particularly true when the original lender has filed bankruptcy, as in the case of New Century and countless others.