"As part of the deal, Clayton has told the prosecutors that starting in 2005, it saw a significant deterioration of lending standards and a parallel jump in exception loans.
Investment banks hired companies like Clayton to evaluate a sample, say 20 percent, of the loans. The review was supposed to determine whether the loans complied with the law and met the lending standards that the mortgage companies said they were using. Loans that did not were classified as exceptions.
As demand for the loans surged, mortgage companies were in a strong enough position to demand that investment banks have Clayton and other consultants look at fewer loans. The lenders wanted the due diligence to find fewer exception loans, which were sold at a discount."
I watched some Jerk on TV selling cars telling how he could get deadbeats into a new car.
As a volume dealer they played banks against each other. To guarentee the bank a minimum volume of "A" (good) loans, they made them agree to fund a certain number of "C" [bad credit but a job] and "D" [really bad credit] clients. Of course to do that the bank charges more for everyone