The ugly pile of toxic mortgage securities closely linked to the financial crisis in the popular imagination looks much better now.

When the U.S. housing boom went bust, defaults surged to unprecedented levels in securitizations minted from 2005 to 2007. But their performance has vastly improved thanks to home price recovery. “Securities are performing better if you measure by delinquency rates,” said Frank Pallotta, the managing partner at Loan Value Group.

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