This week and the past week, we talked about the speculations bubbles and housing prices. I specifically want to talk about the NINA loan. From what I learned, the NINA stood for no income no asset. It was a degraded version of the original type of loan that only people with enough money could get. The original loan was made so that the people who could actually pay it off and get the bank more money along the way would get it. Over time however, The original loan was decreased in value until it became easy for anyone to get a loan. My question was, why would you need to decrease the value that much? Wouldn't they know that the people who but the NINA can't actually afford it and will fault? If you think that they do know, why do you think that there would even be a speculation bubble? Wouldn't it pop before it even started? My thoughts on this are that if they stuck with the original amount of money with the original loan, the NINA crisis in 2007 wouldn't have happened. The crisis could have definately been averted. It just needed to be stopped by not having greed. The no income no asset loan, was a child of greed from the Speculation bubble. The Morgages went up without a need and suddenly crashed in 2007. When the bubble popped, a lot of people lost their jobs and some of the houses being built were never completed. NINA Loans were the downfall in economy, hopefully they won't show up again in the future.
