Too Big To Fail

 I watched The a Big Short and Too Big to Fail on MAX both are exploring the Housing bubble of 2008 and the subsequent Real Estate Market collapse. Neither explains that the Government banking deregulations in the 90's caused banks to change loan requirements from the traditional 20% down 20 or 30 year mortgages to the risky exotic balloon payments 0% down extremely low monthly payments until several years down the road the monthly mortgage ballooned to an astronomical amount the borrowers couldn’t pay. The theory was the borrowers would refinance before the balloon payments were due into a traditional mortgage they didn’t and unable to pay their debt borrowers were either evicted or walked away from their mortgage. 

The banks sold the mortgage to another bank and all these bad mortgages were bundled together with other bad mortgages and sold as real estate bonds as CDOs (Collateralized debt obligations), the theory was the good mortgages would bring up the value of the bad loans and the home owners would refinance into a more traditional 20/30 year mortgage as the house would have appreciated by then and the borrower would have collateral in the house before the balloon payments were due.

CDOs Collateralized debt obligations  are still being sold on Wall Street, again, which lead to the real estate crash of 2008.