Why might securitization lead to a mortgage broker

Reference no: EM131305135

Writing in the Wall Street Journal, Vincent Reinhart, the former director of the Federal Reserve's division of monetary affairs, argued: The problem with securitization is that it dilutes individual responsibility. The mortgage broker can easily become disconnected from the outcome of the initial lending decision. Federal regulation is needed to ensure that mortgage originators perform the appropriate due diligence in matching potential borrowers with loan products.

a. What is securitization?

b. Why might securitization lead to a mortgage broker becoming disconnected from the outcome of a lending decision?

c. What is due diligence? What does Reinhart mean when he says that federal regulation should require that mortgage originators perform due diligence in this context?

Reference no: EM131305135

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