Adea

Pace Morby has built a portfolio of 2,181 properties worth $450 million without ever applying to a bank or going through a single credit check. "I'm just taking over the existing payments, and the debt stays on the seller. It's called Subject-To." One of the most well-known investors in the US explains why debt and ownership are two completely different things, how the due-on-sale clause actually works, and why banks end up looking the other way. "The seller is in foreclosure, I catch up the arrears, hand him a couple thousand, and he transfers the deed to me. The mortgage stays in his name. I never applied to the bank." "I've done this dozens of times. The bank can send a letter, but in the end they say: alright, just keep making the payments." Watch why the bank can't do anything about it, even once it finds out ↓

A software developer, Mike Osinski, who built the models for mortgage derivatives and nearly brought down Wall Street. "I built the model for CDOs, where 1,000 mortgages meant about 500,000 pairwise correlations. Instead of calculating them, I just set the same value for all of them, 0.6. That was the single number plugged into the most complex mathematical model on the market." It was this model that let Wall Street inflate a market where no one looked anymore at whose debts these were or whether they'd ever be paid back. "We took the worst, riskiest mortgages and turned them into something rated AAA. Everyone knew what it was, but nobody cared as long as the bonuses kept coming" Banks handed out subprime mortgages en masse because they earned many times more on them. The government openly encouraged it. When a fund made money, the managers took a big share of the profit. When a fund lost everything, it was the clients' money. The rarest and most unique footage of the quants explaining why the system works exactly this way and how we arrived at the current reality of the market.