What exactly are the “toxic bank assets?”?

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I keep hearing “toxic bank assets” in the news, but I can not understand what exactly are the assets actually toxic. Bad mortgage? what?

  1. Reply
    May 4, 2011 at 1:43 am

    Basically, the mortgage industry made a habit of closing “no doc” and “stated income” loans. That means no documents were required to prove things like employment and verifying income. So, people lied about their income and employment in order to buy homes.

    Now these people (surprise) can’t pay their mortgages, so the loans are beyond bad…they’re “toxic”.

  2. Reply
    john P
    May 4, 2011 at 1:54 am

    Yes. Bundled bad mortgage loans & their derivatives.

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