Mel - If you could post a link to what to are referring to then I can maybe shed a little more light on the subject. But if there is fraud in the secondary market then the mortgage pools would be marketed as a higher rating such as AAA- when in reality what is in that pool is more like BBB- and they knowingly did this then it would be fraud. If the originating bank or banks knowingly underwrote loans poorly, waived guidelines or snuck in a bunch of lower rated loans into the pool then the fraud would be on the bank or banks and not secondary. Actually I believe this might be part of the problem. If there are guidelines in place for what secondary will buy and as a whole that pool meets those guidelines but because those guidelines have been loose just means buyer beware. With any investment comes risk but if they were told it was A risk and they got B risk that could be a problem. Do I think this could be true? Yes. If you are really interested in why I think this then I will be more then happy to answer you.
