How does securitization fraud affect loan origination practices?
How does securitization fraud affect loan origination practices?
Securitization fraud can influence loan origination practices by incentivizing lenders to relax underwriting standards to generate more loans for securitization. This can result in the origination of riskier mortgages, increasing the likelihood of defaults and foreclosures. Furthermore, the pursuit of higher loan volumes for securitization purposes may lead to a focus on quantity over quality, compromising the overall creditworthiness of the mortgage portfolio. Ultimately, this alteration in loan origination practices can have significant repercussions on both borrowers and lenders, impacting the stability of the mortgage market.
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