Last week, I discussed what I see as a serious weakness in the way the mortgage system deals with default risk. Essentially, interest rate risk premiums collected from borrowers that are not needed to meet current losses are paid as income to investors and not reserved to meet future losses. -
A New System to Prepare for the Next Crisis
Last week, I discussed what I see as a serious weakness in the way the mortgage system deals with default risk. Essentially, interest rate risk premiums collected from borrowers that are not needed to meet current losses are paid as income to investors and not reserved to meet future losses.-
By Jack Guttentag