Neither firm issues mortgages directly. They buy home loans from banks and other lenders, some of which they keep on their books and some of which they convert into mortgage-backed securities, which they sell to investors.
they undoubtedly earned their nickname: liar loans. In 2006, an organization called the Mortgage Asset Research Institute examined a hundred stated-income loans and compared them to IRS records: in almost 60 percent of the cases, they discovered, the borrowers had exaggerated their income by more than 50 percent.
Deliberately lying to a lender about your income is a federal crime.
in the frenzied atmosphere of a bubble, companies that stick to the old ways of doing things lose market share, their stock prices suffer, and their top managers get criticized. In the language of game theory, going with the crowd is a dominant strategy: it is the rationally irrational thing to do.
Note: Lemmings...