.......................The answer, stripped of the lingo of high finance, is simple: WaMu loaned too much money to people who couldn't afford to pay it back.
From 2004 to the end of 2007, WaMu made $452.5 billion in some of the riskiest types of home loans: subprime loans, home-equity loans and short-term adjustable-rate mortgages, especially so-called "option ARMs," which allowed people to choose how much they wanted to pay each month.
Many borrowers, unsurprisingly, chose to pay as little as possible. Like credit-card users making only the minimum monthly payment, they ended up owing more than they'd originally borrowed.
All in all, more than half of WaMu's real-estate loans during that period were in one of those three categories. And they were the kinds of loans most likely to go sour once the housing boom cooled and the economy started to sputter.........................
.............In addition, WaMu made billions of dollars' worth of loans with only "limited documentation" of the borrowers' income, net worth or credit history. Such loans — often called "liar loans" or "NINJA loans," for "no income, no job or assets" — made up three-quarters of WaMu's option-ARM portfolio at the end of 2007..........
Were these NINJA loans aimed at illegeal aliens?
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