Nope, wrong again
Just because a bank gives out a bad loan doesn't mean it's sellable to gse or even pls. Don't you understand that these loans go on to be a basis for a mbs? The GSE's have standards of what they can and cannot purchase because they will constitute the substance of the mbs. When a bank sells a mortgage they assure the buyer that it is what they say it is and that it's not being fraudulently misrepresented, and they warranty it. The wall st pls products completely changed the game since despite being fraudulent, they paid rating agencies for AAA ratings. This compounded fraud is what enabled them to wrestle away gse market share. For a short time, GSE's lowered their standards to compete. After the shit hit the fan, the banks still held tons of the worst crap loans with no dupes to dump them on. Enter the treasury, Fhfa and yet another bank puppet administration to impose that honor upon the GSE's by force. Hey, you need to pay full price for this worthless crap, congratulations, we have a lot more. Keep buying 40B a month until the banks are back on their feet. Somehow, the GSE's still survived this coerced madness, due to their strong book of business built over 70 years. It has never been their job to purchase fraudulent and poorly underwritten loans
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