Mortgage-backed securities became a significant issue because I.housing prices fell across all regions.
II)these securities were not as widely distributed as previously thought.

Question

Quizplus · Accepted Answer

Mortgage-backed securities became a significant issue for two main reasons: I) the fall in housing prices across various regions led to higher default rates on mortgages, which in turn reduced the value of these securities; and II) these securities were indeed widely distributed among financial institutions, contrary to the belief that their risk was well-diversified, leading to widespread financial instability when their value plummeted.

Mortgage-Backed Securities Became a Significant Issue Because I