Clip transcript
- 0:00Okay, one way to look at what happened here is, if this was a scam, well then it was just
- 0:06a couple of bad actors defrauding some mortgage lenders, right?
- 0:09But maybe some of the responsibility lies with these DSCR loans.
- 0:15Maybe they're a little too easy to get.
- 0:17Lenders rely on appraisal reports, which in some cases can just be one person's guess
- 0:22about how much a house will rent out for.
- 0:25And maybe some of the responsibility also lies with Wall Street.
- 0:29That giant pool of money is maybe too hungry for opportunities to take bigger risks and
- 0:34make bigger profits.
- 0:36And there is a bit of deja vu here, because Wall Street's hunger for risky mortgages
- 0:40is partly why the financial crisis happened.
- 0:43And as a result, we as a society decided that mortgage loans specifically should be less
- 0:49risky.
- 0:51But that was nearly two decades ago.
- 0:53And over the years, Wall Street has slowly rediscovered the allure of riskier, more exotic
- 0:59types of mortgages.
'One person's guess about how much a house will rent out for.' That's what some of these appraisals come down to, and it's fixable: real rent comps, and a cap on how many of these loans one borrower can stack. I'm less sold on the déjà vu with 2008, because these are loans to landlords against rent, in a market far smaller than the one that blew up then.