Subprime loans weren’t made to fail. However the loan providers did care whether they n’t failed or otherwise not.
Unlike old-fashioned mortgage brokers, whom make their funds as borrowers repay the mortgage, numerous subprime lenders made their cash at the start, as a result of closing expenses and brokers costs that may complete over $10,000. In the event that debtor defaulted from the loan later on, the lending company had currently made 1000s of dollars regarding the deal.
And increasingly, loan providers had been offering their loans to Wall Street, so that they wouldn’t be kept keeping the deed in the eventuality of a property property foreclosure.