Prior to the 2007-2009 recession, banks had an incentive to originate subprime mortgages because they could collect origination fees and then sell the mortgage.

Question

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Prior to the recession, banks had an incentive to originate subprime mortgages because they could sell them to investors and receive fees for the origination of the mortgage. This led to an increase in the number of subprime mortgages and ultimately contributed to the housing bubble and subsequent recession.

Prior to the 2007-2009 Recession, Banks Had an Incentive to Originate