In comparing the traditional way of structuring mortgages and the newer structure of providing mortgages that securitized them and insured those securities with credit default swaps, it is clear that the ____ structure increased homeownership rates and that the ___ structure was safer to the health of the overall economy.

Question

Quizplus · Accepted Answer

The newer structure of securitization and credit default swaps increased homeownership rates by making mortgages more accessible and spreading the risk among investors. However, this structure also led to the 2008 financial crisis as the high-risk mortgages were bundled into securities and sold to investors, who had insured them with credit default swaps. This caused a widespread collapse of the housing market and financial institutions, affecting the overall economy. Therefore, the newer structure was riskier for the economy compared to the traditional way of structuring mortgages.

In Comparing the Traditional Way of Structuring Mortgages and the Newer