Post #4094995
2026-07-25 10:46 UTC
Those farcical sums were the risk premium. When financier transmuted these high-risk 30-year mortgages into complex derivatives, they were effectively promising their customers a piece of that risk premium for 28 out of the 30 years that the mortgage ran for.
But it wasn't all financial engineering: subprime mortgage salesmen could also promise customers that they wouldn't lose everything even after a wave of borrower bankruptcies and defaults.
10/
Replies (1)
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@pluralistic@mamot.fr 2026-07-25 10:46
That's because mortgages are *secured*: they are backed by deeds for the homes the borrowers own(ed). If a borrower goes bust, the lender can repossess their house or apartment and sell it to recover the loan amount. Now, the finance sector *did* repossess a fuckton of houses after the crash. 11/