One can hardly escape the home-buying process without passing several important milestones. During the closing of our own house purchase several years ago, the attorney said he was very concerned about the steady stream of "strange" mortgages being approved for buyers who would otherwise not qualify for traditional home loans.

He openly questioned, for instance, whether some buyers would be able to continue paying off their mortgage debt once interest rates reset, based on the incomes that they reported. Of course, buying a series of subprime MBS and CDOs is infinitely more sophisticated. The market, however, had frequent and increasingly nervous discussions about the underlying risks of the $2.3 trillion of subprime loans, according to data from Inside Mortgage Finance, that were extended to borrowers between 2002 and 2006.

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