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Because ratings agencies failed with respect to risk management.
Real estate backed mortgage securities derive their value from the cash flow streams of mortgage payments. Bundling alternative risk classes is a private securitization method used to hide risk and provide high beta returns. The risk of a security is determined by the quality of the underlying mortgages that represent them, and hence a MBS composed of low FICO score borrowers should (by definition) should raise red flags by risk managers.
You seem confused.
Absolutely false! The data is what is important, and you have nothing.
Toxic securities were primarily composed of adjustable rate mortgages, which were much more likely to go into default than standard fixed rate mortgages. Between 2001 and 2008, 88% of all mortgages purchased by GSE's were fixed. This varies heavily with respect to private mortgage origination and securitization, of which 70% of all private label loans were made up of ARM's.
You cannot even define a toxic MBS, nor do you understand the fundamentals of bond pricing necessary to make such determinist statements.
I enjoy reading your posts but you are wasting your time. This wont be the first or last time some of these posters will continue to repeat this misinformation. You can correct them a million times on the very basics and you'll see them repeating the same falsehoods.