How, if at all, has the crisis changed the relationship between the primary and secondary market?
In some sense, the relationship hasn’t changed not at all. Investors are more cautious. They are asking more questions about the collateral behind the securities. They are interested in the underlying credit quality. More thorough and expedient disclosures are required. Ultimately, that caution translates into much stricter underwriting standards, a decline in certain product offerings, and more information sharing between primary and secondary market participants. Because sub-prime and Alt-A loans are almost nonexistent nowadays, obtaining credit is difficult, if not impossible, for prospective low-income home purchasers? On the other hand, analysts say there is an unprecedented inventory of unsold homes. Is there some way to reconcile these two issues? Low- and moderate-income homeowners who demonstrate the capacity to repay a mortgage can obtain an FHA loan. This is their core business. FHA is good at determining who is a good risk in this income group. Their volume will increase si
