DavidOlson of the research firm Wholesale Access says Wall Street investors have lost their appetite for the loans and want companies like New Century to buy them back.
Mr. DAVIDOLSON (Home Equity Industry Analyst, Wholesale Access): A lot of these loans started to have early defaults and they didn't have the cash to buy them out.
DavidOlson, who runs the mortgage research firm Wholesale Access, says lenders were willing to make high-risk loans with the false confidence that if worse came to worse, the borrowers could always sell the house and get their money back.
Mr. Egan and Ms. Badgett were called to testify by the San Francisco City Attorney's Office and lawyers David Boies and Theodore Olson, who are seeking to overturn Proposition 8.