I’m reminded of the story of the scorpion and the frog where the scorpion asks the frog for a ride across the pond. The reluctant frog is hesitant for fear of being stung by the scorpion. The scorpion promises to behave, but stings the frog half-way across the pond drowning them both because it was in his nature to do so
Borrowers are similar. The big hedge funds and even Fannie Mae and Freddie Mac are convinced that borrowers with a track record of habitually defaulting can be redeemed. Perhaps many can, but many can’t. Past performance is usually an indicator of future performance. You will see many borrowers with dicey pasts, but you feel compelled to give them money. Are you sure that you should take that risk?
If the borrower has shown a propensity for not paying, what makes you think they will pay you?