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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: yard_man who wrote (7133)	2/7/2004 1:03:17 PM
From: Ramsey Su	Read Replies (3) of 110194

there is a question on the subprime lenders. LEND and NCEN came to mind. My question is how do they operate these days. Are they pure mortgage originators, taking a fee, then securitize the loans, sell them to the suckers with NO guarantee nor liabilities whatsoever? If that is the case, I not only would not short them, I may buy them. If the economy turns sour, these guys will be making loans left and right while charging loan shark points, legally. However, if they are holding a portfolio themselves, or are providing guarantees on the loans they sold, then it is a completely different story. When I looked at Household long time ago, before they sold to HSBC, there were some magical formula as to how their loans are sold. I forgot the details but it was something like the buyers of the loans will not pay Household the full amount until certain conditions are met at a later date. Anyone in that end of the business that can enlighten us on this subject?

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