The latest news from Wall Street is ...Bear Stearns CEO has been fired. This issue is starting to affect the Wall Street bond traders in even larger numbers than anticipated. Last year, I would have never thought I would be saying that all the major bond trading houses would be affected by the sub-prime debacle. The problem is that the reaction to all of this will create exactly what the markets do not want...a panic. Having been a loan underwriter in my previous life, I am wondering why banks that originate home loans didn't start looking at their lending practices before the market hit the fan?
My thoughts are that this time will be worse than the early 1990's, because the underwriting guidelines were tougher to obtain a home loan. Last year, anyone that had a pulse could get a home loan, even with a bankruptcy less than 5 years old. What changed? ....underwriting.
by: Commercial lender
www.firstselectloans.com
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