Question by sweetnsassy: What does this mean in plain English?
“Owing to a form of financial engineering called securitization, many mortgage lenders had passed the rights to the mortgage payments and related credit/default risk to third-party investors via mortgage-backed securities (MBS) and collateralized debt obligations (CDO). Corporate, individual and institutional investors holding MBS or CDO faced significant losses, as the value of the underlying mortgage assets declined. Stock markets in many countries declined significantly.”
Best answer:
Answer by bud68
It means mortgage lenders made reckless loans to unqualified buyers, packaged the loans into complex bond-like securities and peddled them to investors as “investment-grade” securities. These securities have now tanked.
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