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A date to remember (cont.)


The NINA loan was a predatory loan designed to attract those with little ability to repay. Wall Street had found subprime loans attractive, as they could be very profitable. The NINA (No Income, No Assets) was the most extreme of these financial instruments. The loan documentation included no record of whether the borrower had any ability to actually repay the loan.

The reason this was not a concern was that the originating mortgage lender, which was not a traditional bank, would typically resell the loan within hours of the closing. These loans were then bundled with other, better quality loans, into a package of securitized mortgages. No one was concerned, as it was unlikely that they could fail.


This large bundle of mortgages could then be sold as an investment bond on the world market. This tactic allowed subprime loans to be buried within bonds that were comprised of millions of dollars of mortgages, effectively hiding them from investors.

Of course, it also helps that the large rating firms that were supposed to perform due diligence on the quality of the product making up these types of securities ignored these issues. Because like everyone else, except the original borrowers, they were making huge sums with this process.

At the end of the day, no one, from the mortgage originators, to the Wall Street investment houses, to the rating agencies or even the purchasing financial institutions, questioned the underlying value of the mortgages, because they were all becoming enormously rich.

The real "end of the day" arrived on September 15, 2008.

And this is why, if you had your mortgage foreclosed and were forced to file bankruptcy because of the collapse of the economy, you should not feel bad for the financial industry, as the global financial crisis was crisis of their own making.

Source:, "September 15, 2008: Lehman Brothers Files for Bankruptcy and American Finance Collapses," Richard Kreitner, September 15, 2015

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