3. Prime Alt-A, Alternative -A Sub Prime High Interest rate Low Interest rate Low Risk High Risk

4. After 2001. 9.11 Alan Greenspan lower the interest rate to 1%,keep economy strong

5. Financial System WALL ST. Goldman Sacks CITI Leverage :Borrowing money to amplify the outcome of a deal $$$$$$$ Mortgage!

6. HOUSES PENSION FUNDS INSURANCE COMPANY MUTUAL FUNDS INVESTOR

7. HOUSES PENSION FUNDS INSURANCE COMPANY MUTUAL FUNDS Investor Financial System WALL ST. Goldman Sacks CITI

8. Mortgage Broker Mortgage Lender xxxxx $$$$$

9. Mortgage Lender WALL ST. Goldman Sacks CITI Cash xxxxx Monthly payment

10. SAFEOKAYRISKY xxxxx

11. OKAY RISKY SAFE 4% 10% 7% Rating Agency CDS(Credit Default Swap)

12. Mortgage CollateralCash flowInvestor + CDO Cash

13. OKAY CDO RISKY CDO SAFE CDO 4% 10% 7%

14. Mortgage Lender PENSION FUNDS INSURANCE COMPANY MUTUAL FUNDS WAL L ST. Goldman Sacks CITI Broker Investment Bank Investor

15. Mortgage Lender PENSION FUNDS INSURANCE COMPANY MUTUAL FUNDS WAL L ST. Goldman Sacks CITI Broker Investment Bank Investor More money! More! Money, Money!

16. xxxxx Default

17. House price

19. No Down Payment No Document No Proof of Income

20. PrimeSub Prime Interest rateFixed( about 6%) Indexed ( Market rate+3%) Down payment10%~20%No or little Credit (350~850)Above 700Below 620

21. Mortgage Broker Mortgage Lender xxxxx $$$$$

22. Mortgage Lender WALL ST. Goldman Sacks CITI Cash xxxxx Monthly payment

23. OKAY RISKY SAFE xxxxx

24. OKAY CDO RISKY CDO SAFE CDO 4% 10% 7%

25. Interest rate rose from 1% to 5.25%

26. WALL ST. Goldman Sacks CITI CDO Monthly payment Default

27. FOR SALE FORECLOSURE FORSAKEN Loan=50,000 House=30,000

29. HOUSES PENSION FUNDS INSURANCE COMPANY MUTUAL FUNDS INVESTOR Financial System WA LL ST. Gold man Sacks CIT I Mortgage Lender Bankrupt

30. Prime mortgage Subprime mortgage Alt-A mortgage RMBS Investment BANK Investment BANK CDO(RISKY)CDO(OKAY)CDO( SAFE ) CDS (Credit Default Swap) Investor Securitization (Residential mortgage backed security)