[geeks] [rescue] E250 temperatures

[Patrick Giagnocavo]

Jonathan C. Patschke wrote:

> The problem came into play when the mortgage brokers misrepresented the
> class of debt.  A lot of the sub-prime stuff was represented as
> commercial property loans and "grade A" mortgage debt.  Some of this
> debt is sold and repackaged numerous times before showing up on the
> market under the name of a well-known bank, several layers of
> indirection from the guy who bought the house he couldn't afford via the
> weasel at the mortgage company who fudged the numbers.

The part that is amazing to me:

1.  I am sure that the underlying loan documents were available for 
inspection for prospective buyers, after all, you would end up "owning" 
the mortgages.

2.  Taking a bundle of 1000 mortgages (say $150K each = $150 million), 
you would only need to check up on about 30 of them, chosen at random, 
to determine their quality.  That is about 1 or 2 days' work given that 
you can run credit checks, look up location on Google or using a zip 
code atlas determine approximate demographics of the area, etc.

Apparently, dropping $150 million or more on a packaged loan series, 
was less scrutinized than when I am buying $6K worth of rack mount servers.

--Patrick