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What Caused The Credit Market Collapse

by Doug Mataconis @ 12:24 pm on October 7, 2008. Filed under Business, Credit Crisis, Economics, Sub-Prime Mortgage Crisis

An interesting look at the arcane world of mortgage backed securities and credit default swaps from Sunday’s 60 Minutes:

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One Response to “What Caused The Credit Market Collapse”

  1. Jason says:
    October 7, 2008 at 4:53 pm

    Do you have a Private mortgage insurance (PMI) policy? If you do have one your PMI insurer passes their risk to others by bundling 100 policies together and then they sell them as a credit default swaps (CDS). In doing this they can take 1.7% of the annual policy. They also do this in order to protect themselves from making large cash payments to mortgage providers in the event your home is repossessed. In the mortgage industry this has been the case for decades. If you bought a PMI policy to protect your lender then you are building the CDS market. To avoid this put at least 20% down on your home or pay what it takes now to get rid of the PMI policy. http://nomedals.blogspot.com

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