Private-Label Subprime RMBS Misrepresented

Concerning private-label subprime residential mortgage-backed securities, Wall Street securitizers misrepresented in about 10% of the cases, and that was only 1 year and concerning only 2 of many factors. If a study were done for the whole decade leading up to the crash and concerning dozens of factors that likely should have been taken into account were the Wall Street securitizers performing proper due-diligence for their investor clients, one wonders just how bad the results would be.

Researchers from Columbia University and the University of Chicago have done mortgage investors a big favor by teasing out two examples of how investors were fed bad information on the safety of so-called private-label subprime mortgages during the housing boom.


…in just one year, 2007, the researchers found misrepresentation in about 10 percent of the cases. “Misrepresentations on just [these] two relatively easy-to-quantify dimensions of asset quality could result in forced repurchases of mortgages by intermediaries in upwards of $160 billion,” they say.


…minimum down payment and other requirements like that might be less helpful than focusing on transparency on the loan quality that goes into the security.

via Investors Fed Bad Info During Boom.

If you are an investor in 1-4 unit properties in Arizona, California, Nevada, Oregon, Utah, or Washington, please do the financially responsible thing and make sure you have proper Landlord Insurance with PropertyPak™. We love focusing on real estate and the economy in general, but we are also here to serve your insurance needs.

Hill & Usher (PropertyPak™ is a division) has many insurance offerings. See our menu above for more info and links.

Did this post help you? Let us know by leaving your comment below.

Note: This blog does not provide legal, financial, or accounting advice. Seek professional counsel.

Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.

We do not necessarily fact checked the contents of every linked article or page, etc.

If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.

The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?

For our part, we believe in strong regulations and strong regulators.

We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.

We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.