Subprime loans weren’t built to fail. However the loan providers did care whether they n’t failed or perhaps not.
Unlike conventional lenders, whom make their cash as borrowers repay the mortgage, numerous subprime lenders made their cash in advance, because of closing expenses and agents costs that may complete over $10,000. In the event that debtor defaulted in the loan down the road, the financial institution had currently made thousands in the deal.
And increasingly, loan providers had been attempting to sell their loans to Wall Street, so they really wouldn’t be kept keeping the deed in the eventuality of a foreclosure.