When mortgages originators sell mortgages to Fannie Mae, Freddie Mac, and investment bankers the originators have no additional liability for possible default by the borrow. How will this arrangement influence the incentive of the originators to scrutinize the creditworthiness of the borrow?

Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
ChapterST5: The Great Recession Of 2008-2009: Causes And Response
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When mortgages originators sell mortgages to Fannie Mae, Freddie Mac, and investment bankers the originators have no additional liability for possible default by the borrow. How will this arrangement influence the incentive of the originators to scrutinize the creditworthiness of the borrow?

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