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Pop! Goes the Credit Bubble

How a subprime mortgage meltdown swamped Wall Street.


By Aleksandrs Rozens

August 12, 2007

In the early days of August, mortgage lenders found that some of their most popular home loans--interest-only mortgages and mortgages for large properties known as jumbo loans--were not finding buyers on Wall Street, threatening to derail home sales. At the same time, mortgage brokers like James Nutter found that anyone willing to take certain mortgage loan products off of his hands charged higher rates. A lender that routinely bought mortgages had raised its rates by a full percentage point within a day, something the Kansas City, Mo.-based broker had not heard of in his two decades of working in mortgage finance.

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