Continued Growth and Lower Standards
The private mortgage securitization market continued to grow, and by 2004, had overtaken government/GSE mortgage backed securities issuance. (This is false, based on the cited source -- the rate of private securitization overtook the GSE rate in 2005. Total private issuance never overtook total GSEissuance) Private MBS grew primarily by lowering their standards and securitizing more low quality, high risk mortgages such as Alt-A, and subprime mortgages. Scholars have argued that this relaxation of standards was due to greater competition between securitizers for loans, and greater market power for loan originators. GSEs also relaxed their standards in response, but GSE standards remained higher than private market standards, and GSE securitizations continued to perform well compared to the rest of the market.
Read more about this topic: Residential Mortgage-backed Security
Famous quotes containing the words continued, growth and/or standards:
“Along the journey we commonly forget its goal. Almost every vocation is chosen and entered upon as a means to a purpose but is ultimately continued as a final purpose in itself. Forgetting our objectives is the most frequent stupidity in which we indulge ourselves.”
—Friedrich Nietzsche (1844–1900)
“Next to the right of liberty, the right of property is the most important individual right guaranteed by the Constitution and the one which, united with that of personal liberty, has contributed more to the growth of civilization than any other institution established by the human race.”
—William Howard Taft (1857–1930)
“If one doesn’t know one’s own country, one doesn’t have standards for foreign countries.”
—Johann Wolfgang Von Goethe (1749–1832)