Mortgage news

News, trends and analysis of the mortgage and credit market

Sunday, December 2, 2007

Banking: This Disaster Was Guaranteed




November 29 2007 BusinessWeek.com
Money-back assurances on subprime-linked securities are costing some leading banks billions. Although refund policies have long been standard practice for retailers, they've rarely been given for financial investments--and for good reason. A closer look at the mortgage meltdown reveals Citigroup and other big banks offered a type of money-back guarantee to buyers of nearly $100 billion of subprime mortgage-linked securities. Incredibly risky in retrospect, the refund policies were critical in the banks' push to keep a steady stream of money coming in during the peak years of the housing market from 2004 to 2006. But the myopic decision has been a central cause of the billions in losses that some banks are now reporting. Citi, which declined to comment, announced on Nov. 5 that it was on the hook for $25 billion worth of such deals.
 Read 
 more 

Best Mortgage Companies

Email this article to a friend | Send us a comment

0 Comments:

Post a Comment

Subscribe to Post Comments [Atom]

Links to this post:

Create a Link

<< Home