“With the housing boom still in full force in early 2006, Long Beach Mortgage Co., one of the nation’s biggest subprime lenders, sent its eager Wall Street investors yet another package containing thousands of new home loans. Among them was a mortgage for a modest, two-bedroom home on a quiet suburban street outside Washington, D.C. – taken out by a borrower who could not afford it. The mortgage was rolled into a bundle of bonds worth $1.7 billion, assembled and marketed by Goldman Sachs and other venerable financial companies. The bonds were blessed as the highest possible quality by the major credit raters and then purchased by some of the world’s most savvy institutional investors. By now it is well established that the collapse of such mortgage-backed securities set off a chain reaction that nearly wrecked the global economy last year. This is the story of one risky mortgage and its path through the U.S. financial system. It is also the story of one man who succumbed to the lure of easy credit and lives in financial purgatory while he waits for his bank to decide if he is worthy of a loan modification.”
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