Quote:
Originally Posted by ophiuchus
if i'm not mistaken 20% down payment or less requires mandatory mortgage insurance. that would mean that many of the toxic default loans had to be covered.
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Well, what I have seen firsthand, is the mortgage Insurance company will cover a certain amount of the loss, but the banks need to either hold the asset until the prices rise again, or accept it and take the rest of the loss to free up their money...
They are choosing the latter...
Is this going to change if they don't need to back bad loans? Who knows...