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Wondering why home financing relaxed in the years following Y2K? In the third of a four-part series, Sal describes the investment phenomenon between 2000 and 2006 that allowed more people to bid on homes and increased demand artificially. Scholars observe the basic home loan model and the securitization of the mortgage market in the 90s. As Sal moves in the 21st century he discusses the multi-party investment chain profiting off of home loans and the new role of banks as transactional, temporary loan holders. He also discusses the role of rating agencies, introducing learners to potentially overoptimistic security ratings on mortgages base on the increases home prices and low default rates.
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