Mortgage-backed CDOs were a disaster in 2007 because

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Mortgage-backed CDOs (Collateralized Debt Obligations) were a disaster in 2007 primarily because they were heavily invested in subprime mortgages, which are loans given to borrowers with lower credit ratings. As home prices stalled and began to decline, the value of these securities plummeted. Additionally, many of these mortgages were variable rate loans, which meant that as interest rates increased, borrowers faced higher monthly payments, leading to an increase in defaults. This combination of factors contributed to the financial crisis of 2007-2008.

Mortgage-Backed CDOs Were a Disaster in 2007 Because