Because sellers of mortgage-backed securities paid ratings agencies for ratings, the ratings accurately predicted the increased foreclosures in the housing market.

Question

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The fact that sellers paid ratings agencies for ratings may have influenced the accuracy of the ratings, leading them to potentially overstate the safety of the mortgage-backed securities. Therefore, the ratings may not have accurately predicted the increased foreclosures.

Because Sellers of Mortgage-Backed Securities Paid Ratings Agencies for Ratings