2. Banks originate these loans because they are profitable and then sell them to reduce their risk.

What can you say about the investors who purchase these loans? Why don’t they demand a risk premium? Who holds these? Is it your mom’s pension fund, your own retirement account, your bank’s portfolio? Isn’t MBS and GSE debt the most widely held debt? Don’t GSEs own this by the billions of dollars? How much is know about the end lenders of these loans?