In One Bundle of Mortgages, the Subprime Crisis Reverberates
By Peter Eavis - DealBook
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Yet the financial crisis still reverberates for many others, in large part because of the insidious reach of the financial products that Wall Street created. Subprime securities still pose a significant legal risk to the firms that packaged them, and they use up capital that could be deployed elsewhere in the economy.
This is the story of one of those bonds, GSAMP Trust 2007 NC1.
The name is the sort of gobbledygook that is common in the bond market, but it tells a story. The “GS” is derived from Goldman Sachs. The Wall Street firm didn’t actually make mortgages to subprime borrowers that were in the deal. Instead, Goldman bought them from a lender called New Century, the “NC” in the title.
It was New Century that lent to Wendy Fillmore, when she and her husband wanted to buy their house in Las Vegas in 2006. The home cost $276,000. New Century provided two loans, one for a $221,000 loan and a second mortgage for $53,000. Data for the Goldman deal shows that it contains the Fillmores’ larger loan.
Ms. Fillmore’s husband was, and still is, an information technology specialist, and at the time she was working as a transcriber. She recalls the surprise she felt when New Century agreed to the make the mortgages.
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