Accentuate The Positive

The Egocentricity of the Present Part 11 of 22

The chairman of Presidents Nixon and Fords Council of Economic Advisers, Herb Stein, was fond of saying that, if something cannot go on forever, it will stop. Eventually the conceit of a new era in housing could not go on forever, and it stopped. The bubble popped, and a harsh correction Fellow Traders has ensued.

With that abridged historical background, lets turn back to the financial markets. We saw a wave of innovative mortgage products during the housing boom. Indeed, there would have been no other way for many borrowers to have procured financing without these new mortgage products.

These innovations in Forex Trading Machine financing took two forms. First, credit-scoring models enabled lenders to better sort and price mortgages made to nonprime borrowers. The second set of innovations allowed these loans to be funded and sold to a new class of investors. While traditional mortgages had long been securitized and sold through government-sponsored enterprises such as Fannie Mae and Freddie Mac, the securitization market ushered in new players from the private sector who would hold nonprime mortgages that could not meet the standards of Fannie and Freddie and that banks would generally not hold in portfolios.

Financing

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