Since the great mortgage crash (aka “the bubble”) blew in 2007, two types of mortgages disappeared, both long in use. Possibly held hostage in some Potomac River warehouse or nearby closet, but gone. By “long in use,” I mean that these were not some Frankenstein creation during the bubble, but one as old as banking itself, probably recognizable in Caesar’s Rome, and the second very well-tested and successful since exactly 1980. The first: the asset-heavy borrower without documentable income, or any income at all. The second, a variant: the borrower with unusual income, but in plain sight, just not on IRS forms. The most basic asset-heavy loan: a family is willing to put, say, 50 percent down to buy a home. A lender cannot possibly lose money on that deal. Not even in the Depression (my Granddaddy the banker would testify). Maybe in Phoenix in 2005, at the absolute top, but no loan was sensible there and then. The obvious protection to bankers making a loan versu...
- Loans to asset-heavy borrowers without documentable income, or any income at all, and to borrowers with unsual income, have both been curtailed.
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